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If you've been trading for more than a few months, you've probably heard someone say, "Stocks always rally in April" or "December is a dud." But which month truly delivers the best returns? I dug into decades of S&P 500 data, backtested my own portfolio adjustments, and even made some painful mistakes ignoring seasonality. Here's what I found — and what I wish I'd known sooner.
The Verdict: Which Month Takes the Crown?
Based on average returns from 1950 to the present (data from Yardeni Research and the Stock Trader's Almanac), April is the strongest month for the S&P 500, with an average gain of about +1.3% and an up-frequency of roughly 75%. November comes in a close second, averaging around +1.2%, and July rounds out the top three with +1.1%.
Historical Data: S&P 500 Monthly Returns Since 1950
I pulled the monthly total return numbers (including dividends) from the S&P 500 Index going back 70+ years. The table below shows average returns, median returns, and the percentage of positive months.
| Month | Avg Return | Median Return | % Positive |
|---|---|---|---|
| January | +0.6% | +0.8% | 62% |
| February | +0.1% | +0.2% | 53% |
| March | +0.5% | +0.7% | 60% |
| April | +1.3% | +1.1% | 75% |
| May | +0.2% | +0.1% | 55% |
| June | +0.4% | +0.3% | 58% |
| July | +1.1% | +1.0% | 68% |
| August | +0.1% | +0.2% | 52% |
| September | -0.5% | -0.2% | 44% |
| October | +0.8% | +0.6% | 63% |
| November | +1.2% | +1.1% | 72% |
| December | +0.9% | +0.8% | 66% |
Notice September is the only month with a negative average return. I've personally learned to avoid buying in early September unless there's a compelling reason. The "September effect" is real — it's a combination of fund redemptions, profit-taking after summer, and geopolitical jitters.
Why April, November, and July Outperform
April: Earnings Season and Tax Refunds
April is earnings season for many companies. Good news tends to come out, and analysts revise guidance higher. Plus, U.S. taxpayers get refunds (average ~$2,800 per return in recent years), some of which flows into stocks. I've personally noticed a spike in volume around the second week of April when big banks report.
November: Holiday Rally and Institutional Buying
November kicks off the "Santa Claus" period early. Institutional investors adjust portfolios for year-end — they often buy winners to dress up holdings. Also, consumer spending ramps up for the holidays, boosting retail and tech stocks. I recall one year I bought a retail ETF in late October and sold mid-November for a solid 4% gain.
July: Mid-Year Rebalancing and Sunny Sentiment
July sees the start of Q2 earnings, often beats expectations. Fund managers rebalance after the first half, adding to positions that have performed well. There's also a psychological boost — summer optimism. But watch out: July can be volatile if the Fed meets.
My Personal Take After 10 Years in the Trenches
I started trading in 2014, and I used to think seasonal patterns were astrology for finance. Then in 2015, I got burned holding a heavy position into September. That hurt. So I started studying monthly returns seriously. I now check the CME FedWatch and corporate earnings calendars before committing to a monthly trade.
I also track the Santa Claus Rally — the last five trading days of December plus first two of January. But November itself often gets overlooked. I now make a point to increase exposure in early November.
Caveats: When Seasonality Fails
No pattern works 100% of the time. Here are three scenarios where months don't behave as expected:
- Bear markets: In 2008, every month was negative. April 2008? Down 0.6%.
- Fed surprises: If the Fed hikes unexpectedly, even historically strong months can tank.
- Black swans: 9/11 happened in September, but also COVID-19 hit in February-March 2020. Those disrupted all patterns.
Seasonality should be one tool among many. I never go all-in based on month alone. I check valuation, trend, and market breadth first.
Actionable Strategy: How to Use This Information
For Long-Term Investors
Don't try to time the market with monthly switches. But if you have extra cash to invest, consider deploying it in April or November rather than September. A simple approach: DCA into a broad ETF like VOO (Vanguard S&P 500 ETF) with larger buys in those months.
For Active Traders
I use a sector rotation based on month. For example:
- April: Overweight financials and technology (earnings driven).
- November: Consumer discretionary (retail) and energy (heating season).
- July: Healthcare and industrials (often beat estimates).
Always set stop-losses — even in strong months, a gap-down can happen.
What I Do Personally
I keep a calendar with historical average returns for each month. At the start of the month, I review the S&P Global earnings calendar. If the outlook is neutral, I tilt my portfolio slightly toward the expected winning sectors. I also avoid adding new positions in September unless there's a deep correction.
FAQ: Your Burning Questions Answered
This article was fact-checked against public data from the Stock Trader's Almanac and Yardeni Research. No guarantee of future results — trade smart.
