Ep 17- Seasonality, Cycles & the Calendar Edge with Jeffrey Hirsch Editor-in-Chief of the Stock T...

Buy in October and get your portfolio sober.

Hey, Dan. Appreciate that, man. You're a pretty nice guy yourself. We always seem to have a good time together. Good chat, a lot of smiles along with some insightful and, you know, candid market commentary, world events. We seem to cover a lot of bases when we hang out. So, good to be with you, man.

Nothing really. I avoided it from the beginning, trying to make my own mark out there. And then Dad started this in, he incorporated the Hirsch organization in 1966 when I was in utero. He had started at a place called the Indicator Digest back in the '60s with his cousin, my godfather, Samson Coslo, who was a songwriter and a movie producer and pretty cool guy who I had the pleasure of knowing and hanging out at his cool places. And Sam, who we named our first son after because they ended up introducing my parents, but Sam Coslo sold his music publishing company to RCA way back and then he got stock for it. Stock tanked. He's like, 'All right, now I got to figure what's going on here.' So he became a student of the market. And long story short, over the years, you know, he did a bunch of things. And then in 1961, I believe it was, he ran an ad in Barron's for this new publication called Indicator Digest, which you may have heard of. It was kind of a proving ground for a lot of analysts and newsletter writers. So he runs this ad, an A/B split in Barron's. You know, he was an ad kind of oriented guy, marketing guy. And, you know, you have two ads on two different presses. One's got one headline, one's got the other. The ad hits. He calls up my father, who was in the songwriting business, music publishing business as well, and said, 'Yeah, I want you to come run operations for me.' So Dad went there, it was in Palisades Park, New Jersey. A few years later along the way, he met my mother, who was a widow, and ended up putting them together. But he had this idea, this epiphany, to take all these market cycles, patterns, seasonal trends, indicators, strategies, put them all together in a calendar format so that you could follow the market schedule along with your own or his own. And he went and incorporated the business and started putting together the Almanac in '66, came out with the first edition in '67, like you said, right around my coming into the world. Over the years, you know, I worked in the mailroom. I shipped books to everybody. We looked at charts. We grew up, you know, I'd go say good night to him, you know, in my pajamas, and he'd say, 'What do you think of this chart?' and whatever. And I was, you know, we had the business was in the house. So I go through my life, I go to school, I do a bunch of things. And I'm back in like the late '80s trying to make my way. I was landscaping and working in, maybe going to that business and really trying to avoid it. Working with Dad part-time a little bit, you know, helping out with the business. And my buddy says to me, 'Jeff, what are you doing? Go work for your father.' And this was like fall '89. So I did. And I went in there with demands. I said, 'I want a business card. I want a title. I want a salary.' You know, it wasn't much. And then what happened was, first of all, I had, my hair was long. You can't tell that right now. My sons both have my long curly hair that I had. I had an earring, a nice diamond I got from my girlfriend, whatever. But went to my first business meeting with him, and we did a bunch of newsletters back then. It was Ground Floor Stocks and Smart Money. We went and interviewed these CEOs of some company. It was like a Vancouver mining company or something. I felt so uncomfortable with my hair and earring. Next day, took the earring out, got a haircut, and then along the way, you know, I realized I had a little genetics, maybe some environmental connection from growing up with it where a lot of the stuff that he talked about makes sense to me. And I was getting interested. I mean, I ran the numbers for some of the calculations in the Almanac using this little ruler and the Barron's lab pages. I had done that stuff with an adding machine and graph paper over the years. And then there was one meeting, I forget exactly what the topic was, but we were sitting around our conference table. We had, you know, some other writers and analysts there, and Dad was pitching some concept, some new pattern, some new seasonal nuance or anomaly he saw, and everyone was like, 'Uh, well, you know, what are you talking about, Yale?' And I was like, 'I got, I understand what you're saying.' And that's kind of when it clicked. This was like the early '90s when I realized that I had a similar thought process, similar way of thinking. I could understand. I had the visualization that he had, the pattern recognition, not quite the wordsmithing capacity and not quite the iconic thinking. But I think we've done all right and we've carried on the legacy and it all makes sense to me. I mean, we don't just look at cycles. We look at fundamentals, technicals, monetary policy, sentiment, but our foundation is behavioral finance. It's seasonality, what people do repeatedly with their money over different time frames, whether it be daily, throughout the week, monthly. We find a lot of interesting things happen around the beginnings and ends and middles of things. So people pay their bills the same time every month. They get up and go to work the same time every day. They have dinner at the same time. They have their same holiday celebrations. You know, Memorial Day is coming up as we're talking here. So people are creatures of habit.

Yeah. A lucky guy, man. I'm lucky. You know, I stand on the shoulders of a giant, as Isaac Newton said.

Price-to-sales ratio.

First thing Pop taught me when I started, we used to look at stocks a lot, you know, call them up. Now, now I run screens, but the hardest thing for the CFOs in the company to manipulate is topline. So it's relative to either the market or the industry, but generally you want a good valuation is a company that's got a low price-to-sales ratio.

Very good.

And I kind of separate the two in my mind. I kind of combine them a little bit, you know, and separate them also. I mean, yes, I do. First, of course, I eat a lot of my own cooking as much as I can. I find that when I'm making an investment or a swing type trade and I go in to do something at that day, I become a little bit of a day trader. One of the first things that I did calculation-wise was, I was telling you before, was the half-hourly data ticks. So, you know, if we like a stock, we look at, for, we like to use buy limits and we don't just buy anything willy-nilly. We want to pick a level that we like based upon the charts and the valuation. So if there's a stock I like, you know, at X dollars, but it's a little bit above that, I'll wait till about maybe 2:00, 2:30 when you see that if I don't get it early in the day, that little daily lull to get in there. So we kind of use, I totally use both aspects of the things in the Almanac, the seasonal swing trades and the intraday patterns. Sometimes though, you know, you got to just bite the bullet and go in and buy something that, you know, you know is coming into season and, you know, is set up well and especially if it's liquid enough. You don't need to necessarily use a crazy buy limit below the market. You just go in and kind of split the bid-ask. Just get in there so you don't get beaten up too much by the market makers. But yeah, we do a lot of sector trades with sector seasonality and ETFs. We have stock screen picks that are also overlaid with seasonality. We usually look for a big basket of new stocks in October, November, right around we get our seasonal MACD buy signal for the best months of the year. We had a little event back in April in the market where things got kind of washed out. We had been stopped out of a bunch of things along the way using our, you know, sort of risk protections with just basic old-school chart analysis stops and things like that. And the seasonal trades in the, you know, we had our best six months seasonal sell signal in April for the Dow and the S&P, but we were still hanging on to the Qs, you know, NASDAQ and the Russells, the IWM, they got stopped out just before the Liberation Day washout. But because NASDAQ has a best eight months, once the dust settled a little bit, we got back in. So we have a nice trade on right now in the Qs and the IWM from, I believe it was the April 17th issue in the newsletter. So you got to keep going back at it and sometimes things get stopped out. Sometimes trades don't work. But over time, these strategies, these seasonal trades with the technical fundamental overlays that we use have done well. That's why we're here for what, 58, almost 59 years.

If all things are equal, it's better that one doesn't do that. But there is risk. You have to deal with your emotions and such. And we did put some stops on when things were falling, getting a little bit tumultuous there. Don't necessarily do regularly with the seasonal switching strategy trades because of the volatility, because of the post-election year action that we were seeing. Some very, there's some stuff in the current edition of the Almanac, the '25 Almanac. Right now I'm about to put to bed the '26. So I've got, I got two books in my head. It happens every year. But there's a page about the post-election year performance by party. And while post-election years in general have been better than they used to be, you know, initially traditionally was first two years of the president's cycle were difficult for the markets. But since '85, we've seen post-election years being substantially better and actually the best year of the four-year cycle because it's sort of a lead-up to the midterm year. They wanted people to be happy ahead of the midterm election. But historically before that, you know, Republican administrations had worse performance in the post-election year versus Democrats in the midterm. They come in and tend to kick ass, take names, get stuff done quickly. They had an agenda kind of like Reagan after Carter and they tends to put this uncertainty into the market. So tend to be more difficult and whereas Democrats tend to take a little more time to get some things accomplished and they had to have that midterm sort of weakness. We saw that with the Biden term with the bear market and troubles we had in '22. So we started out this year looking pretty strong. You know, everyone's rah-rah, there's a new sheriff in town. And then there's a lot of uncertainty starts coming in. They start trying to change a lot of things quickly and we had this selloff and it sort of came back into that sort of old-school Republican administration post-election year weakness. Yes, we've bounced off that. It's been quite an impressive rally, but we're still only about flat for the year. Last I looked earlier, we were getting back up and here, go throw a little technicals at us, at that November 6th rally that we had the day after the election. That's what, was it like 5870 or something if memory serves. I think I have that chart here just to, if I remember correctly. So that's, that's kind of what we've been playing with today. Looks like we're threatening to push through that which would be encouraging for the near-term rally to continue. I think the high that day or the close of day was 5929. So that was, it's kind of a level I'm looking at right now. I had put out a little thrust but verified technical look with all the, you know, the Zweig breath thrust and the Lowry thrust and all these technical things that are valid and really show what's going on. I mean, it's, it's just like there's a Yiddish term, tuchus auf tisch, or like put your wallet, your butt on the table, put your money where your mouth is, you know. So that's kind of what the market's doing here. They're really showing people are putting their money where they think it's going and we've got a nice bull market move. There's some debate about whether this was a bear market or not. I'm not convinced it was. Seems like a bull correction to me, but we've gotten through a lot of those levels that were overhead and we're looking at that sort of last one right now. So I think we got some room to run here into June. There's also a midyear peak, the sort of what we call Christmas in July, this NASDAQ midyear rally, which we've seen a lot recently. And then you get into the weak part of the year, August and September, kind of lines up with some of the post-election year Q3 weakness we've seen, as well as these tariff pauses and people go away. I'm going out to Yellowstone with my wife for some hiking in August. There might be a few less people on the street. We see volume dry up there in the summer. So that's what we're looking at.

Buy in October and get your portfolio sober.

I mean, it's the best six months a year, the best eight months of the year. We like to get into the equities around September, October when we see the turn. We use a little MACD trigger on that and then we reposition in May. So this period between April and June, we start to reposition some things which we're doing. So basically the best six months, the best eight months switching strategy, couple bunch of pages on the Almanac. That's the first place I go with everybody.

Yep.

Now, now that's why we're here. Yeah. That's why me and you were talking. Yeah. What are we doing with options? Selling puts either in, you know, and also it depends upon, you have your pattern and it depends upon the setup for the year.

Yeah. Or I mean, if you think the old-school strategy, which is right up your alley, before there were ETFs, before there were funds, and there used to be wrap-free agreements, what the way people, you know, you traded the best and worst six months was you just wrote covered calls against your positions from May through October or during that period. That's the way to go still.

How would you use a call? I know you're supposed to be interviewing me, but how would you use a call to get out of a stock here, say for the reposition in May time frame?

Yep. Whereas for the worst six months, you know, the sell in May period or reposition May period, whatever, you would write, I believe, the covered calls below the market. So you're just lowering your cost, taking premium, and still hanging on to the stock.

What I like, that was the traditional covered call writing strategy for the end of the best six months or the worst months.

Yeah, traditional. Yeah. Yeah. Third Friday.

So you're selling in May, bro.