By Haddon Libby

For more than thirty years, the stock market tended to follow a pattern where returns are more robust between the months of November and April versus the May to October period.  Researchers looked at the average return for these two periods of the year dating back to 1990 and found that the winter and spring period averages a 7% return while the hotter months average a much cooler 2% return.

If last month was any indication as to what is in store for the markets over the next six months, investors received mixed signals.  While the Dow Jones remained flat for 2023, Technology stocks went on a bit of a run, adding 12% for the month to bring year-to-date returns to 33% for this business sector! Tech stocks were down 32% for 2022 resulting in a seventeen month return of -10%.

Looking at the fifty largest stocks of the S&P 500, returns have been driven by just a handful of large cap stocks.  NVIDIA has led performance, up over 170% in 2023 thanks to the H100 computer chip that enables ChatGPT and generative artificial intelligence.  This $40,000 processing chip has vaulted NVIDIA into the rare air of companies with values of more than $1 trillion.


The trillion-dollar club is led by Apple with a valuation of $2.95 trillion.  Microsoft is second at $2.5 trillion with Google at $1.6 trillion, Amazon $1.3 trillion and NVIDIA at $1 trillion.  For what it is worth, Apple’s valuation is more than the 2000 companies of the Russell 2000.  It is also bigger than the entire value of all publicly traded German stocks – a list that includes heavyweights like SAP, Siemens, Porsche, Deutsche Telekom, Mercedes Benz, BMW, and Volkswagen.

Energy companies have had the worst performance in 2023, down 11%.  Despite the weak performance, this sector is up the most of any business sector over the last three years in posting a 40% return.

After the Tech sector, the Communications sector has had the best year, up 26%, thanks in large part to Meta (aka Facebook) seeing its price soar 125%.  Google is also considered a communications company and has seen returns of 40% this year.  Despite the performance of these mega-caps, communications stocks have been up only 2.6% over the last three years.

It may seem counterintuitive but Consumer Cyclical stocks are up nearly 19% this year.  One would normally think that these companies would see their value decline as the economy weakens.  Given that Amazon and Tesla are the two biggest components of this sector, the performance of these two stocks has an outsized impact on this sector.  In 2023, Amazon is up over 45% – a sharp contrast from last year when the stock lost half of its value.  Tesla was down 65% in 2022 and has bounced back by 68% resulting in a 40% decrease over the seventeen-month period.  Musk having to sell stock to pay for the acquisition of Twitter served to weaken the stock’s performance.

With it likely that the economy will cool under the weight of higher interest rates and inflation, there is a large possibility of a recession as we enter 2024.

Given that FDIC insured bank certificates of deposit are yielding 5.3% for as little as three months and short-term US Treasury bills are paying more than 5%, fixed income markets are presenting investors with an easy way to reduce risk at present.  Few can remember a time when nearly riskless investments pay more than riskier ones.  Most investment grade bonds currently pay less than these risk-free investments.

Given that stocks have historically yielded a long-term rate of return in the 8-9% area, investors currently have an easy way to reduce risk in their investment portfolios if concerned.  Then again, how might generative A.I. impact the world and the value of stocks?

Haddon Libby is the Founder and Chief Investment Officer of Winslow Drake Investment Management.  This article is meant for entertainment purposes and is not intended to be investment advice.  If you want investment advice, please visit or your financial professional.