A Positive Quarter for Stocks?

October 26, 2011 | Greg Leonberger, FSA, EA, MAAA, FCA, Director of Research, Managing Partner

Given the fourth quarter U.S. stock market performance to date, we have been asked if certain quarters have historically offered more positive performance. Based on S&P 500 data from 1926 through 3Q2011, the answer seems to be yes, as there does appear to be some persistency across the four quarters. As the graph demonstrates, the fourth quarter has offered the highest frequency of positive returns and highest average return (3.55%). For the sake of comparison, the S&P 500 is up about 8.6% through October 25th, so while we would expect some reversion to the mean as the year winds down, there is reason for optimism about this quarter’s stock market returns.