More Light than Shade II
In the first part of our series, we looked at the profitable development of the S&P 500 and noted that following a month with an increase in share values of 5%, there was a higher chance to make a profit. In the second part, we will now consider the very same events and the respective time periods which follow them. This time, however, our analysis will depart from the year 1950. Historically speaking, every situation has its peculiarities. Central Bank policies, lawmaking, money supply, velocity of money, consumer behavior, technological progress, development of financial instruments and, last but not least, social and political development all influence stock markets in one way or another. However, when it comes to market players’ incentives, there is something of fundamental value that has never changed: On one side, this is their insatiable hunger for profits, and, on the other side, their dislike of losses. Yet, it is evident that not all their expectations will be fulfilled in the future.
In the context of a shorter period under consideration, the new results are portrayed in the table below: Compared to the table in our first part, the number of periods is lower; they are, however, much more profitable. And, furthermore, one again stands a better chance at generating profit. In order to maintain this positive spirit, we examine the chances of profits/losses for short time periods on one hand and longer holding periods on the other hand. Stay tuned!
Source of data: The calculations are based on data from www.yahoo.finance.com
