On a gorgeous late spring day in London, what does this summer have in store for markets?

Since I started the JIC Portfolio in January 2012 with £151,000 in cash (now £940,000), I have kept a record of my performance for the winter period (1 November to 30 April) and the summer period (1 May to 31 October). I've done this because studies show that over the long term, most returns occur in winter.

Suggested reasons:

• By the time one gets to April, investors are tempted to take profits, so the balance between buyers and sellers shifts towards sellers.

• In December, US investors often sell losing positions to offset capital gains for tax purposes (tax-loss harvesting). In January, this capital is frequently reinvested back into the market, driving up asset prices. Furthermore, the UK tax year-end in early April often prompts a flurry of final capital deployments into tax-advantaged accounts, providing additional market support.

• The winter and spring months coincide with annual reports and forward-looking guidance. Companies often project optimism and lay out their strategic vision for the new year during Q4 and Q1 earnings calls. By contrast, the late summer months can suffer from a corporate news vacuum, with fewer major catalysts to drive momentum.

• Over the summer, investors are distracted by other things as the days are longer and warmer. Liquidity dries up.

My Record:

Apart from 2020, when everything was bouncing back from the severe COVID sell-off in March/April, last year was the only summer period to beat the preceding winter. In twelve out of fourteen years, the winter months have proved far more fruitful for me.

Predicting the future is easy. Getting it right is near impossible, but I'll have a go. After a twelve-month period that has seen my portfolio grow by 43.9%, including a winter six months of +15.7%, I would hazard a guess that the current period will see more subdued returns.

Why?

Below, I have set up some charts that, to me, are warning signals. That is why, with the JIC Portfolio up 16% this year, I have raised some cash and am positioned to take advantage of any summer sell-off. I accept, however, that timing is very difficult and that I could also be wrong. A resolution of the Iran war, even if fudged, could lead to a relief rally in the market. There is also much excitement about the SpaceX IPO in June. I see retail investors are going to be offered stock, and I am sure they will clamour to get on board. Also, I see Chat GPT has announced its IPO. See the end of this post for my thoughts on all these IPO's.

The market is becoming more and more focused on fewer stocks

Another way of looking at the narrow breadth of the market

And another way: Nvidia's market cap is larger than India, South Korea, Taiwan, Canada, the UK, France, Germany, etc

The Bank of America survey shows fund managers are all very bullish (sheep-like?)

Self-explanatory, and why Buffett has built up such a large cash position

Hedge Funds concentrating their portfolios in Semiconductors - What could go wrong?

A warning

And last, Polemic Paine sums it all up in the title of his latest piece on Substack: "They don't ring a bell at the Top. They IPO"

The piece can be found HERE

Enjoy the weather and the long weekend!