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TABLE 7-12 (Cominued)

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COMMON SENSE AND SEASONALITY Nonseasonal Markets

Most comprehensive worl on seasonality include not only agricultural markets but currencies, interest rates, and indices. Common sense tells us that the primarj feetrains follow a clear seasonal pattem based upon a single crop year. This calendar cycle also applies to coffee, cocoa, and oranges, although competition from South America has limited the exfreme moves that resulted from a freeze in Floridas orange groves. Grain seasonality has been slowly changing as well, as Brazil improves their production of soybeans. Cattle and hog prices, dependent upon the cost of feed, and still mariceted more actively in the fall because of weather, show a sfrong seasonal frend even though they have a growth and feeding cycle that is not confined to a calendar year. Livestock pattems have adjusted to long-term competition fran Ausfralia and New Zealand.

These agricultural markets are reasonable candidates for seasonal analjsis, but may require careful study to identifj shifting patterns in competition and storage. What about Treasurj bonds or the Japanese yen? Should we look for seasonal pattems in the financial markets? AVhile we can aiue that certain stocks are highly dependent upon seasonal business, can we say that the demand on money is higher in the summer than in the winter, or that enough tourists convert their currencies to yen when they visit japan during the summer that this effect drives the value of the yen consistently higher? Are automobile exports fran japan sfronger or weaker during a certain season, so that there is a predictable pattem? These scenarios are highly unlikely and have no assurance, such as the coming of winter, thai cars must be sold the way grain must be harvested. In financial maikets the players can choose their time to act; they can hedge their commitments or wait for a better opportunity. This choice makes any pattem that might exist uncertain. The study of seasonality should be limited to those markets that depend on weaUier and seasons, either directly or indirectly.

BeingToo Specific aboutTargets

Nature is not precise and selecting an optimal dsy of the year to set a long position is not likely to work. Small