Seasonal Strategy for QQQ?

A subscriber requested a test of holding Invesco QQQ Trust (QQQ) during November through April and idle cash during May through October. Informed by the Trading Calendar, we consider four strategies:

1. QQQ – buy and hold QQQ.
2. QQQ Seasonal (Idle Cash) – hold QQQ during November through April and idle cash during May through October, as requested.
3. QQQ No-even (Idle Cash) – hold QQQ during odd years and idle cash during even years (avoiding stocks during years with U.S. federal elections).
4. QQQ No-even (1-year T-note) – hold QQQ during odd years and 1-year U.S. Treasury notes (T-note) bought at the beginning of the year during even years.

We consider average monthly return, standard deviation of monthly returns, monthly reward/risk (average return divided by standard deviation), compound annual growth rate (CAGR) and maximum drawdown (MaxDD). We ignore frictions and tax implications of trading once or twice a year. Using monthly dividend-adjusted returns for QQQ during March 1999 (inception) through October 2023, we find that: (more…)