By the Numbers  

The good news is historically when the US stock market closes the first quarter of the year higher than it opened, there is a very high probability it will end the near with positive returns (40/42 times) as you can see in the chart below.  What else is rather obvious, the higher the first quarter gain, the greater the probability the year ends positive.  On the outside, the data suggests there is a strong argument to stay invested for the entire year.

san ramon fee only cfp napfa investment advisor - 1st quarter trend stats.png

Those numbers tell a compelling story but when slicing the data in a different way, I wondered if the story becomes less persuasive when removing the first quarter’s performance. Just how many of those 42 years ended with a Q2-Q4 positive performance? I wanted to find out if better returns were achieved by selling at the end of the first quarter and sitting on the sidelines or staying fully invested. As it turns, out while its not as strong, it was statistically significant as 33/40 years ended with positive Q2 through Q4 performance. If you are an evidenced based investor, the data suggests you ignore those inner sell concerns and stay invested for the balance of the year.  Or, better yet, watch price and volume and follow your plan.