You don’t need to be fully invested in stocks year-round to capture market-like returns — or even beat them. That’s the surprising reality behind Norman Fosback’s Seasonality Timing System (STS), a calendar-based trading strategy that has quietly delivered market-beating, risk-adjusted performance for more than four decades.
A Calendar-Driven Strategy with Market-Beating Potential
Developed in the 1970s by Fosback, then head of the Institute for Econometric Research, the STS capitalizes on predictable market rhythms. It holds stocks only during the historically strong periods: around the turn of the month and the days leading up to stock market holidays. For the rest of the time, the system moves entirely into cash, limiting exposure to market volatility.
For example, under the current STS schedule, investors are 100% in cash until March 27, after which they remain fully invested until April 7.
The system’s effectiveness comes from the market’s non-random behavior. Historically, the strongest returns have clustered around the turn of the month, when 401(k) contributions and employer matches are invested, creating upward momentum. Similarly, traders tend to cover their shorts before extended holiday breaks, driving prices higher.
Consistent Outperformance Through Volatile Markets
This year has provided a clear illustration of the STS’ advantage. Through March 19, the system produced a modest 0.3% year-to-date loss, while a buy-and-hold strategy in the S&P 500 resulted in a 3.5% decline.
Over the 40+ years that my auditing firm has tracked the STS, it has consistently delivered superior risk-adjusted returns, ranking first among all market-timing services we follow.
A striking example of the system’s effectiveness is its avoidance of the market’s worst days. Of the 10 biggest down days in 2025, the STS was in cash on five of them. Conversely, it was invested during eight of the 10 best-performing days, underscoring its ability to sidestep volatility while capturing market gains.
A Boring but Brilliant Long-Term Strategy
Unlike many market-beating systems of the 1980s and 1990s, which quickly lost their edge, the STS remains effective decades later. Its enduring success is a testament to its structural advantages, based on recurring market patterns rather than fleeting anomalies.
However, this strategy isn’t for adrenaline-seeking traders. The STS requires patience, as you’ll spend well over half the time in cash. For investors accustomed to the daily drama of the market, this can feel dull. But history suggests that boredom pays off: tolerating the calm often leads to superior long-term returns.
Best Suited for Tax-Deferred Accounts
The frequent short-term trades make the STS most appropriate for tax-advantaged accounts like 401(k)s and IRAs, where capital gains taxes are deferred. Using it in a taxable account would be inefficient, given the potential for short-term tax consequences.
A Hedge Fund-Like Edge for Individual Investors
The STS bears a resemblance to the approach used by the legendary Medallion Fund, the hedge fund managed by James Simons of Renaissance Technologies. According to a 2020 study by UCLA Professor Bradford Cornell, Medallion delivered a 63.3% annual return between 1988 and 2018, despite its trades being profitable only 50.75% of the time.
Medallion’s success stems from thousands of short-term trades that collectively produce consistent gains — a concept echoed in the STS’ method of systematically capturing market tailwinds while avoiding turbulence.
Boring Today, Profitable Tomorrow
For investors willing to embrace its unexciting discipline, the STS offers a compelling edge. By sidestepping much of the market’s turmoil and strategically timing its exposure, it achieves returns that rival — and often surpass — those of buy-and-hold investing, all while spending much of the year safely in cash.
In a market often driven by emotion and noise, the Seasonality Timing System proves that sometimes, less is more.
