Log Out of Your Brokerage Account Until Labor Day

Although the S&P 500 closed at all-time highs again yesterday, the markets have materially slowed down over the past week.

With a busy week for earnings ahead, there may be some more upside. But seasonally, August is a slow month for stocks, and September tends to see markets pull back.

Here’s a chart worth saving and referring back to – it’s a composite that shows the S&P 500’s average daily performance throughout any given year:

Turn Your Images On

The seasonal weak period for stocks has arrived.

Why do markets slow down in the lazy days of summer?

Historically, it’s when brokers used to take their vacations and motor off to the Hamptons.

Today, with algorithms running the show, it’s harder to say why.

But it’s a trend that has largely remained intact over the decades, and while past performance doesn’t show future performance, it’s a seasonal trend worth remembering.

If you’re not a trader, you can probably log out of your brokerage account for the next few months and not miss anything.

If you’re a trader, beware – the lack of a clear direction either way could be a challenge. And a slowdown in markets could precede an autumn selloff. Now isn’t the time to make overly leveraged trades, and to exit them if you’ve been in them.

After this year’s “Liberation Day” slide lower, stocks may not be inclined for a massive pullback this summer – but it would be healthy for markets before a year-end rally.

~ Addison

P.S. With markets slowing down now, they’re at greater risk of breaking lower following their massive rally over the past few months.

As we learn more about tariffs and trade deals – not to mention earnings – over the coming weeks, the seasonal selloff period in September and October could be more volatile than usual. Another reason to avoid leverage, and enjoy other things in life besides the stock market for the next few months.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three.

Although the S&P 500 closed at all-time highs again yesterday, the markets have materially slowed down over the past week.

With a busy week for earnings ahead, there may be some more upside. But seasonally, August is a slow month for stocks, and September tends to see markets pull back.

Here’s a chart worth saving and referring back to – it’s a composite that shows the S&P 500’s average daily performance throughout any given year:

Turn Your Images On

The seasonal weak period for stocks has arrived.

Why do markets slow down in the lazy days of summer?

Historically, it’s when brokers used to take their vacations and motor off to the Hamptons.

Today, with algorithms running the show, it’s harder to say why.

But it’s a trend that has largely remained intact over the decades, and while past performance doesn’t show future performance, it’s a seasonal trend worth remembering.

If you’re not a trader, you can probably log out of your brokerage account for the next few months and not miss anything.

After this year’s “Liberation Day” slide lower, stocks may not be inclined for a massive pullback this summer – but it would be healthy for markets before a year-end rally.

~ Addison

P.S. With markets slowing down now, they’re at greater risk of breaking lower following their massive rally over the past few months.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Bitcoin isn’t a trade and trying to time it with chart patterns generally does not work.

I’ve never really felt like technical analysis carried much real predictive edge in general and when it comes to BTC, I’ve seen too many failed “death crosses” to change my opinion.

The one that just triggered in mid-November as bitcoin flirted with $90,000 is just the latest.

What really matters? It’s a monetary regime change – if market participants are trading anything it’s getting rid of a currency (“it’s the denominator, stupid”) for a store of value – and we’re seeing it in spades with Bitcoin and gold.

White-collar hiring is, in fact, slowing. Engel’s Pause is taking hold of the jobs picture.

In the meantime, everyday Americans are rediscovering an ancient truth: there is wisdom in wearing steel-toed boots.

Jobs that struggle to attract bodies in boom times are now seeing stampedes of applicants.

– Georgia’s Department of Corrections: applications up 40%.

– The U.S. military: reached 2025 recruiting goals early.

– Waste management staffing: applications up 50%.

For now, economists call this “labor market tightness.” Anyone who has ever scrubbed a grease trap knows it by another name: fear.

Bitcoin has historically weathered 30%+ corrections while still in a bull market.

Global liquidity fears and lower odds of a Fed rate cut in December are driving bitcoin and other cryptos lower at present.

As Andrew Zatlin described on Thursday’s Live! we can expect a series of stimulus efforts next year, ahead of the midterms, driving new liquidity. The $2,000 “tariff rebate” checks President Trump has been touting are but one example.

When higher liquidity hits the market – in whatever form it takes – today’s bitcoin buyers will be waiting.

Make like the whales, and use market selloffs and stimulus to your advantage.

The market seems to know something about private credit that we don’t. And in a big enough liquidity event for private credit, investors will have to sell off more liquid assets if they want capital.

That’s the danger private credit poses today, exactly at a time when rules are being eased to make it easier for retail investors like us to buy into this asset class.

I’m in the camp that this smells like a way to keep the party going by providing another source of liquidity – the passive investment flows from your regular 401(k) contributions. The smell takes on a sour note as this sector starts to falter.

Perhaps today’s selloff is simply a reaction to declining interest rates, the growth of private credit, and a few inevitable deals that have gone sour recently.