In a recent discussion with some friends about our modern-day, techno-savvy society, one of my friends said, “Well, we’re so old fashioned that we still plant by the signs!” Here is the background for those unfamiliar with this term. Going all the way back to biblical texts, farmers have used the stars in the sky to discern how to get the most from their agriculture efforts. They used the constellations in the sky to guide their planting and harvesting activities. Eventually astrologers recognized the patterns that the stars made and divided these into a 12-part path and gave names to each of those stages. This belt of signs was called the Zodiac. A planting chart/calendar was developed for the beginning of each symbol of the zodiac. Here are a few of the old-time rules that many farmers still follow to this day.
- Plant is during the fruitful signs of Taurus, Cancer, Scorpio or Pisces.
- Aries is for breaking new ground, turn dirt and nurture soil.
- Place any indoor plants outside on an earth or water sign.
- Transplant/plant while the moon is in its first or second quarter and while it is passing through Capricorn.
- Plant decorative flowers in the airy sign of Libra (which also represents beauty).
- To stand drought, plant crops in Taurus and Cancer.
- Plant beans in Gemini.
- Set out flower bushes in December and January in the signs of Capricorn and Pisces.
- Plant potatoes on a dark night in March; avoid planting them in the sign of Pisces.
- Never plant on the first day of a new moon; nor on a day when it is changing quarters.
- Turn sod, pull weeds and till in the garden in the fourth quarter of the moon phases.
Adhering to these rules ensured that one would have a bountiful crop and food on the table.
The abundance of digital tools and fast-paced social media streams provide investors with volumes of information. The problem for most investors is filtering out the noise from all the signals. Right now, the consensus trading view is:
- The US economy is destined to dive into a recession this year.
- The recession will push stock prices to new lows for this secular bear market.
- Bonds will rally as investors flood out of stocks to survive the recession.
There are sound data points to support the consensus view. That’s why its consensus.
Old-school stock and bond traders (author included) abide by their own durable if not completely scientific trading rules. Yale Hirsch published the first edition of the Stock Traders’ Almanac in 1968 as a tool to help investors recognize the patterns that repeat across the calendar. He invented and named the “Santa Claus Rally” in 1972. If you’ve heard the phrase “Sell in May and go away,” you’ve encountered another of Mr. Hirsch’s bromides.
Since 1949, we have had 13 years with bear market bottoms followed by a positive January in the new year. In those 13 instances we have never seen a down year. Most of those 13 “rebound years” produced double digit stock price gains. Old-timers stay mindful of the historical relationship between big moves in key seasonal periods of the calendar.
The Securities and Exchange Commission requires investment product sellers to remind potential clients that “past performance is no guarantee of future results.” Because of this, I’ll leave you with another agriculture reminder from the New Testament book of Galatians:
“Whatever a man sows, that he will also reap.”