How Our Seasonality Software Beats Buy-and-Hold in 2025

BY KEITH KAPLAN
CEO, TRADESMITH

Imagine you’re in the year 1850, driving down a dusty old road on a horse-drawn carriage.

The route is clear. It’s not your first trip. You know when you’ll arrive and what to expect along the way.

The leaders of your team are strong, more than pulling their weight to get where you want to go… But more than half are sick, weary, hardly limping along. Though taken together, you’re cruising along at an acceptable pace.

All of a sudden, you hear the thunder of hooves upon the ground. You look over your shoulder and spot a cloud of golden dust rising against the sky.

Soon, another carriage catches up and quickly passes you. The man at the reins looks to be in just the same station as you, and the carriage itself is in just the same shape, pulling the same haul.

The key difference is the horses drawing his carriage are all prized stallion thoroughbreds, all at a full gallop and in the prime of their lives.

Some time later, you catch up to the man who’s parked in front of a barn, resting his team.

You call out to him: “Why waste the time? I’ll run another five miles by the time you’re back on the trail!”

“I can cover five miles at twice your pace,” he calls back. “I can well afford this rest.”

Sure enough, you’re eating his dust half an hour later.

Here’s why I’m telling you this story…

The first carriage is like buying and holding an index fund in the stock market.

Often, you’re being pulled forward by just a few strong stocks – like the Magnificent 7 over the past few years.

But when those horses falter, like in the 2025 crash, all through 2022, early 2020, and 2008… the ride comes to a grinding stop.

The second carriage, on the other hand, is like using a new investment strategy we released at the start of this year.

With it, you focus on a specific group of stocks with the best historical tendency of moving higher at any given time. Not only that, a special factor makes these stocks continually ready to outperform.

Using it has led to returns that have on average doubled the return of the S&P 500 since 2006. Not only that, it’s completely avoided any prolonged stretch of losses over that entire span.

This strategy was a massive investment breakthrough for us. At the time, it was and in many ways still is the biggest breakthrough in the history of our firm.

Let me show you how it works… with some timely signals you can act on today.

How Seasonality Helps Us Beat the Market

Our seasonality breakthrough has to do with an incredible innovation we’ve made on a piece of software we debuted in 2023.

This software helps you optimize the market’s moves by keeping you in only the stocks with the best chance of rising, faster than the market, at any given time.

Dedicated readers know I’m talking about our seasonality software.

Seasonality is the practice of averaging out the price data of the past to make effective projections about the future.

For example, take a look at the chart below of seasonality data for video streaming giant Netflix (NFLX).

You might remember that we made a big call on NFLX as part of our launch presentation for this breakthrough back in January.

Using the last 15 years of NFLX prices, we were able to confidently project back then that NFLX would rally hard from Jan. 17 to April 17:

Our data showed an average return of 23.7% in that period, with gains 93.3% of the time.

NFLX wound up surging, just as we projected. It ended that three-month period 13.4% higher… beating the market handily as the S&P 500 lost 12%.

It didn’t quite make the average return this year. But for a year marred by tariffs, trade deals, global conflicts and other chaos, we can’t complain holding a stock that goes up through all that even as the benchmarks sell off.

We were able to do this because of our powerful Seasonal Synergy signal.

These signals occur under a certain set of conditions…

One, the stock’s seasonality for the given period must have a historical accuracy rate of 80% or greater.
Two, the average pattern return is 4% or greater.
And three, the annualized return is 20% or greater.

Those three conditions form our “Optimal” flag, which you can also see above.

But when a stock gets into one of its Optimal seasonal periods along with its Optimal Relative Strength Index (RSI) level, that triggers our Seasonal Synergy signal.

We got another one of those signals back in January on the world’s largest company, Nvidia (NVDA).

From Jan. 26 to Feb. 20, NVDA has historically traded positive 14 of the past 15 years (93.3%). In that span, it posted an average return of 9.2%:

This year, though, NVDA did even better. Through that same seasonal period, NVDA stock rose 18.3%.

But as you can see, these Seasonal Synergy signals are far from the only tradable seasonal periods our software can find.

Look at this chart of Meta Platforms (META) and all the green seasonal windows it’s had this year:

I wrote about this one on my X account, because it’s just so extraordinary and demonstrates how valuable seasonals can be. (In fact, I love posting about seasonality in general – and do so as frequently as I can – so be sure to follow me there for more.)

Buying and holding a share of META throughout 2025 has earned you about 19%… or, in stock terms, about $107 per share as of this writing.

But if you simply traded META stock during these green windows above, you instead profited 11.8% from Jan. 18 to Feb. 2, an $81 per share return…

Then 25.7% from April 25 to June 4, for a $140 per share return…

And 3.5% from June 11 to July 7, for a $24 per share return.

That’s three trades on META for a total of $245 in gains… versus less than half of that just holding the stock. An outperformance of 129%.

Now, you don’t need to squint at those three charts above of the Magnificent 7 stocks to form your own seasonality trading plan for the rest of the year.

No matter whether you subscribe to our software or not, we’re opening up access for this critically important period.

From now through July 22, you can run your stock tickers through this tool at the website we’ve set up for registrants to our upcoming seasonality webinar.

To try it for yourself, register here to attend Tuesday’s webinar and get free access to seasonality patterns on your stocks.

But, of course, regular readers know that’s not all we’ve done with seasonality…

At the start of this year, we developed a way to systematically trade seasonal signals that goes back to what I said at the beginning of today’s essay…

The Breakthrough

Six months ago, we debuted our Seasonal Edge strategy.

With this strategy, you plan ahead to trade only the 50 stocks with the strongest seasonality patterns during the upcoming year. You buy these stocks during their best seasonal periods, then sell once that period has ended.

Rinse and repeat as soon as another of the 50 stocks comes into one of its best trading windows, based on seasonality.

Additionally, you look for stocks that haven’t run too far, too fast in the short term. That ensures you’re only running with a team of “well-rested horses.”

Remember, people who own index funds and “set it and forget it” wind up with predictably average returns. They’re running teams of horses of wildly varying effectiveness.

But for people like you and me, who are deeply involved in the markets every day and are putting in a ton of effort to beat the average, you want to find a strategy that optimizes the index approach.

That’s what the new seasonality strategy does.

You still focus on a specific group of stocks, but you ONLY trade the stocks at times when their historical data provides a ton of evidence that it’s the best time to hold them. And you reject everything that doesn’t have that evidence.

All this is to say, this takes a little bit more work – a few trades per month. But the results are more than worth it.

We ran a rolling test of this strategy from 2006 to 2024, with each year testing the previous 15 years of price data for over 5,000 stocks.

And this trading strategy – involving the best stocks to buy at their very strongest times of year, based on their historical price action – yielded a total return of 857%…

With performance that doubled the S&P 500 on average every single year.

Even more impressive is the fact that, unlike the S&P 500 which entered a bear market in 2008 and 2022, this strategy never lost money for long. You can see on the chart below how the Seasonality strategy broke away from the benchmark in 2008 and never looked back…

The biggest drawdown we see was during the late 2018 volatility.

Now look at 2020 – barely a blip.

And even better, look at 2022… nothing but gains.

This is why the horse and buggy analogy makes so much sense. This strategy rejects everything except the fastest, strongest horses with the best track record at any given time.

When you use it, you’re happy to switch up your team every so often… because you’re ultimately getting where you want to go faster and more efficiently.

If that’s not a better way of investing, I’m not sure what is.

We’re set to open access to this new seasonality strategy once again next Tuesday, July 22.

Once we do, everyone who decides to join will get automatic trade alerts of the best stocks to trade at their seasonally strongest times of the year.

In the meantime, though, we want to do something special to help you understand just how big this strategy is.

If you go here and sign up for our upcoming webinar all about this strategy, you’ll be able to access the same seasonality tool I’ve been showing you today… with a forecast for the rest of 2025 and importantly, the rest of this month.

Take a few minutes and plug in your portfolio top holdings. See when, throughout 2025, they’re set to surge or sink… and write down those dates as a trading plan for the rest of the year.

Once you see how this tool works firsthand, on your own stocks, my hope is you’ll realize how powerful it is to invest this way.

More details on the strategy, including limited time access to the seasonality tool, right here.

How Our Seasonality Software Beats Buy-and-Hold in 2025