April! April! 2
The month of April 2020 saw one of the strongest gains in over 80 years. If the euphoria gets out of hand, we take a step back and consider possible scenarios based on the historical development of the stock exchanges.
As the table shows, six of the past ten events were followed by negative months. Can you read a regularity from this table? Can we assume that a very positive month will be followed by a negative one, as the table above shows (with a 60% probability)?
The answer to this is ambiguous. If you look at the 25 best months between 1928 and 2019, you will find that the following month was 13 times negative and 12 times positive.
If you limit the period under consideration to the years after 1950, you will find that the ratio 16: 9 is in favor of the positive subsequent months.
Quite a significant number that may need more attention. But how? Stay tuned!
