According to Shakespeare, 15th March, the Ides of March, is when Caesar was assassinated, and is a time which should be feared. Is the Ides of March a time when investors should be wary in 2023?
The original date for the Ides was not the 15th, but rather the full moon in March, which this year is the 7th March. The Almanac Trader in the US has noted a number of trend reversals in March - 2000, 2003, 2009, and 2020 - some down, some up, but always dramatic.
With each of the latter, and other prior examples, the key preceding component was that markets were in a highly emotional state, and not being driven by fundamentals, as is typically the case at major tops or bottoms.
Why March 2023?
In this week’s teleconference, and the last two weeks' Friday notes, we showed evidence of a revival of the emotional trading by retail investors which was evident in 2020/21.
Little by way of rational analysis sits behind such recent action, it is more a matter of revived animal spirits. Such complacent behaviour is in spite of mountainous and varied risks, on which see Four Wobbly Pillars.
The go-to person on this subject is the late Paul Macrae Montgomery, one of the few original thinkers on investment matters, as we covered back in 2020 in “Turning point or distraction?”.
Paul was a leading authority in the small but apparently profitable field of moon cycle research for investors. He acknowledged that most of the time the moon cycle is just noise vis-á-vis equities and bonds, and is much more useful in the more volatile and emotional commodity markets.
But every so often there is clear evidence of emotional stock market investors, and March was of specific interest:
“Since time immemorial the period of time we associate with the Ides of March has been viewed as a time when human spirts reach a nadir and begin to improve.”
This was Paul back in March 2009. If it is an emotional market, I do not believe that the Ides need necessarily coincide with a low – it can be a significant turning point in either direction.
As noted in the last teleconference, there is a little upside left for the FTSE 100 and Dax. The 7th March might be a magnet for such peaks.
[If you are interested in looking at the evidence for moon cycles moving markets, as bizarre as that might seem, do have a look here]