Generally speaking, summer isn't a great time for the market. Not only are investors distracted by other things like vacations, ball games, golf and cookouts, most companies just don't see a lot of growth in the middle of the year -- most major corporate moves are made at the beginning or end of the calendar year.
This time of year is worse for some areas than others though. Here's a closer look at the summer's most likely losers, in no certain order.
Auto Parts and Equipment
Auto parts suppliers and retailers have been pretty hot of late, turning a few heads that normally wouldn't look their way. Don't get too excited just yet though. This year's to-date gain of 16% for the industry is actually the normal "good" year's result, which is always followed -- even in one of those "good" years -- by a pretty severe lull lasting from late-July to late-September. Even in the average year though, the year-end bullishness for auto parts and equipment stocks doesn't start until November, after a pullback of around 5%.
Thrifts and Mortgage Finance
Not only is the summertime generally a poor time of year for thrifts and mortgage companies, that weakness tends to last through November in all but the very best years (and even in those very best years, the bullishness doesn't kick into high gear until November).
This year, unfortunately, looks like it's following the path of the normal year. Underscoring that prospect are interest rates that are rising just enough to spook people out of a home purchase, but not rising enough to really bolster profits for lenders.
Environmental Facility Services
There aren't many names in the group, and even fewer that are recognizable, but regardless of their numbers, summer is particularly tough on environmental facility service stocks. On average, this group loses 6% between the end of June and late October. Even in a decidedly bullish year, these names collectively lose ground until September comes.
No matter how you slice is, agricultural products are almost always a good bet from early October on. On the other hand, agricultural products are never a good bet between July and September. The industry's names fall a typical 3% over the course of July, August and the end of September. Every now and then they'll make a little bullish progress during the summer, but very little. Most of the time its a pretty miserable period. This year's shaping up to be a pretty miserable summer.
Movies and Entertainment
At first thought you'd think movies and entertainment is an unseasonal, non-cyclical business. But, that's not quite the case. Most consumers are busier than usual doing outdoor things when the weather is nice. That's what most big movie releases fall at the beginning or end of the year, when people are forced to remain indoors or forced to get out and shop.
This mid-year lull in entertainment-interest is also true of these stocks. These names tend to fall 7% between the end of May and the beginning of October.
It's true that the middle of the year is great weather, which is ideal for all types of construction. It's not true that suppliers of building materials thrive in the summer time though. Most orders have already been placed by then, with the bulk of them already being delivered to construction sites. This is the time of year when construction materials companies have to start discounting their goods to clear them out for the next year's, or have to warn investors that they underestimated the year's demand. Either way, it's a lethargic stretch for these stocks between early June and late-September, even in a year that ends up being bullish.
Steel is a particularly troubled metal/material this time of year.
While this year appears to be an exception to the norm thus far, it's almost suspicious how far ahead of the curve semiconductor equipment stocks are ahead of the curve for 2017 to-date. They're up 36%, on average, versus a typical 22% year-to-date gain in a good year, and an 11% gain in the average year.
Whatever the case, these semiconductor equipment stocks tend to fall 10% between mid-July and early October, making them one of the biggest summer losers.
Last but not least, though trucking stocks have been on a roll since May, don't be shocked if they change direction soon. While these names always start the year strong, they always struggle in the middle of the year, giving up 6% of their value over the course of August and September. It doesn't matter if it's a good year or not.
That being said, don't count on that weakness lasting. It generally reverses in September, in spades.