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Navigating investment volatility

Navigating investment volatility: Unraveling the 15% of challenging months

As seasoned investors, we understand that the path to financial success is lined with both triumphs and tribulations. In the world of investment, acknowledging and preparing for periods of volatility is crucial for achieving long-term gains. In this blog, we shed light on a statistically significant occurrence – the 15% of months that exhibit challenging market conditions – and provide insights to help you make informed investment decisions.

At Apple Tree we use the AEX and the EUROSTOXX50 (ESTX50) as underlying indices for our strategy. We have defined a "Bad Month" using three criteria:

  • The index, excluding dividends, loses 8% or more, i.e. the closing value is 8% lower than the opening value;

  • The maximum in swing between the highest and lowest values of the index is 15% or more; or

  • The lowest value of the index is 8% or more below the opening value (but the index may close higher than that).

Occurrence of Bad Months

Apple Tree is an option fund, and hence ‘our’ months differ from the calendar months. Our months go from the 3rd Friday of the month until 3rd Friday of the month (option expiration). We have used AEX data from Jan 1995 until August 2023, and for the ESTX50 from May 2007 until August 2023. Over that period 14.6% (AEX) and 16.9% (ESTX50) of all months are Bad Months. Or roughly, 1 out of 7 months is historically a Bad Month.

Navigating investment volatility

Understanding the patterns – identifying the toughest month(s)

Analyzing historical data reveals intriguing insights into the distribution of challenging months throughout the year. We delve deeper to uncover which month holds the title for being the toughest for investors.

Understanding the patterns – identifying the toughest month(s)

The chart shows how often (%), for example, March has been a Bad Month out of all the March months available in the data. In this case there were 16 months of March for the ESTX50 between May 2007 and August 2023 of which 5 (31.3%) were Bad Months. Or roughly 1 every three months of March is a Bad Month. And, as we can see, although the two indices have their own worst months, the pattern is similar.


The investment journey is a dynamic expedition that demands a comprehensive understanding of both the highs and lows. Our analysis underscores the statistical significance of the 15% of months categorized as "Bad Months" and highlights the crucial need for strategic planning and preparedness. Risk management, informed decision-making, diversification and staying calm(!) investors can confidently navigate the challenging months and unlock the potential for sustained financial growth.

Source: Apple Tree Capital Partners

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