Seasonal effects do exist. Historically, markets have - on average - delivered stronger returns through late autumn and winter than during the summer. But averages mask a huge variation. Some of the worst sell‑offs have occurred in the supposedly 'strong' months, and some of the best rallies have happened in the height of summer.
The relevance today is less about seasonality itself and more about how investors behave around it.
We see this every year: as we move into March and April, the same questions arise about whether markets are 'running out of steam.' It becomes a self‑reinforcing narrative. If enough market participants expect weaker summer returns, positioning becomes cautious, liquidity thins - and the prophecy risks fulfilling itself.
It is similar to momentum, a behavioural phenomenon with a long empirical track record. Assets that have been rising are more likely to continue rising, not because fundamentals magically improve in a straight line, but because sentiment, flows and positioning reinforce one another. Human behaviour doesn’t reset at the end of the month or the season.
March has given us several vivid examples: individual tweets triggering sharp intraday market swings, exaggerated reactions to minor data surprises, and investors reducing risk not because anything changed in the fundamental outlook, but because everyone else seemed nervous. These are classic signals of a market driven by sentiment rather than valuation.
