Entry in progress—B.P.
Wikipedia: Halloween indicator
The Halloween indicator is a theory that the period from November to April inclusive has significantly stronger stock market growth on average than the other months. This gives rise to an investment strategy known by the saying Sell in May and go away, in which stocks are sold at the start of May and the proceeds held in bonds or a deposit account; stocks are bought again in the autumn, typically around Halloween.
Though this effect is often cited informally, it has largely been ignored in academic circles (perhaps being assumed to be a mere superstition). Nonetheless analysis shows that the effect has indeed occurred in almost all countries examined, and since the 17th century in the United Kingdom; it is strongest in Europe.
It is not clear what causes the effect, though it is often thought to be related to summer vacations.
A Selection of the World’s Proverbs Arranged Linguistically.
With Authoritative Introductions to the Proverbs of 27 Countries and Races
By Selwyn Gurney Champion
Published by G. Routledge & Sons, Limited
947. Sell in May and go away. (Stock Exchange.)
By Ronald Staples
Published by Taxation Pub. Co.
Some stockbrokers have for a number of years given the advice ‘Sell in May and go away”.
29 May 1963, Times (London), “Investors Awaiting More Signs Of Growth Spate Of New Unit Trusts” (Business and Finance) By Our City Editor, Pg. 15, col. A:
The steam seems to have gone out of the spring rally and the traditionalists who still believe in the old adage “sell in May and go away” looked like being right again.
1 June 1977, Wall Street Journal, “Analysts See London Stock Slump Persisting As Inflation and Interest-Rate Worries Surface” by Robert L. Muller, pg. 37:
It may only be a classic case of “sell in May and go away” for the summer, and certainly there aren’t any signs of panic.
A Dictionary of Catch Phrases:
British and American, from the Sixteenth Century to the Present Day
By Eric Partridge, Paul Beale
Published by Routledge
sell in May and go away was, during the inter-war years of 1919-39, a Brit. stockbrokers’ saying, which was temporarily killed by WW2. The going away referred to a long holiday in, e. g., the south of France (Skehan; period indicated by Leonard Pearce; both 1977.) The chairman of an investment trust tells me it is still understood in the City, though the doctrine is obsolete. In the days when individual investors dominated the market, it was thought that share prices dropped in the holiday season for lack of buyers. So you sold in May, held onto the cash, and went away. Later, you could buy at lower priced, at the end of the holidays. If this was ever true, it isn’t nowadays, since the institutions dominate the market—and they never go away (Playfair, 1977).
Beating the Dow:
A High-Return, Low-Risk Method for Investing in the Dow Jones Industrial Stocks With As Little As $5,000
By Michael O’Higgins with John Downes
New York, NY: HarperPerennial
I live on a golf course, and maybe that’s one reason I’m so fond of a seasonal technique we call the Halloween indicator, ...
International Herald Tribune
January’s Promise and the Curse of May
By Christine Stopp
Published: SATURDAY, FEBRUARY 18, 1995
Those who disregard stock market proverbs like “sell in May and go away, buy back on St. Leger’s day” in the autumn should think again. There is statistical evidence to prove that some months - and even weeks and days - in the year have historically been better for your portfolio than others.
Google Groups: misc.invest.technical
From: Me Lazy
Subject: Halloween indicator/Sell in May-Ben Jacobsen
I’m looking for a reference as old as possible (fifties/sixties) on the saying Sell in May and go away.
Also known as the Halloween indicator. If anyone has information/references on this saying/references please let me know by e-mail.()
The Oxford Dictionary of Phrase and Fable
By Elizabeth Knowles
Published by Oxford University Press
‘Sell in May and go away.’ says the old adage.
New York (NY) Times
STRATEGIES; Scary Stuff, Indeed: Halloween as Bellwether
By MARK HULBERT
Published: February 20, 2000
SELL in May and go away.
That bit of investor folklore lies near the heart of one of the latest market-timing strategies to capture public attention. It’s an incredibly simple idea, involving just two moves a year: Sell all your stocks at the very end of April and reinvest the money on Oct. 31.
I confess to having been skeptical several months ago, when I started receiving e-mail messages about the strategy, which is sometimes called the Halloween Indicator. But I have since come to believe that there is something to it. Indeed, the concept has withstood a considerable amount of statistical scrutiny.
Consider, first, the historical record from year end 1925 through 1998, as compiled by Ibbotson Associates, a research firm in Chicago. Over those 73 years, large-capitalization stocks returned 4.9 percentage points more, annualized, between Nov. 1 and April 30 than they did between May 1 and Oct. 31. The difference is even more impressive for small-cap stocks, for which the difference has been 18.2 percentage points.
New York (NY) Times
STRATEGIES; Tales of Summer in the Stock Market: True or False?
By MARK HULBERT
Published: June 3, 2001
CALL it the battle of the clichés.
In one corner is that fixture of market folklore known as the ‘’summer rally’’—the idea that sometime between Memorial Day and Labor Day, the stock market stages one of its strongest rallies of the year.
In the opposite corner is the belief that the summer, either over all or in part, is not good for stocks. This concept has several colorful labels, including the ‘’May-June disaster period’’ or ‘’Sell in May and go away.’’
Are either of these apparent patterns true? Several recent studies provide an answer. While there is evidence of some seasonal variation in market performance, the May-June disaster doesn’t always stand up to scrutiny. And for believers in a ‘’summer rally,’’ the news is bad: It is a myth.
December 2002, The American Economic Review, “The Halloween Indicator, ‘Sell in May and Go Away’: Another Puzzle” by Sven Bouman and Ben Jacobsen, pg. 1618:
Every year, usually in the month May, the European financial press refers to a—presumably—old and inherited market saying: “Sell in May and go away.” According to this saying, the month of May signals the start of a bear market, so that investors are better off selling their stocks and holding cash. There are two different endings to the saying. The first of these is: “but remember to come back in September”; the second is: “but buy back on St. Leger Day”—in which “St. Leger Day” refers to the date of a classic horse race run at Doncaster in England every September. According to the saying, stock returns should be lower during May through September than during the rest of the year, and although many Americans tend to be unfamiliar with it, Michael O’Higgins and John Downes (1990) report a closely related and similar strategy related to market timing. Referred to as the Halloween indicator, it is “so named because it would have you in the stock market starting October 31 and through April 30 and out of the market for the other half of the year.”
‘Sell in May...’ in election years?
By Mark Hulbert, CBS.MarketWatch.com
Last update: 12:01 a.m. EDT April 1, 2004
ANNANDALE, Va. (CBS.MW)—If you’re a follower of the “Sell In May and Go Away” seasonal timing system, should you care that this is an election year?
This timing system that I’m referring to, of course, is the one that is based on the historical tendency of the stock market to produce the bulk of its gains between Halloween and the subsequent May Day. It’s because of this tendency, of course, that some investors believe that they won’t miss much if they get out of all stocks at the end of April ("sell in May") and not get back into equities until the following November ("go away").
This seasonal tendency also goes by the name “Halloween Indicator.”
Powerful as this seasonal tendency is, however, it is at least possible that it doesn’t work during Election Years. During such years, after all, the six-month period during which we’re supposed to “go away” comes to an end just days prior to when voters go the polls.
Knowing that voters often “vote their pocketbooks,” the incumbent party inevitably does everything in its power during election years to pump up the economy to a fever pitch by Election Day.
I should note in this regard that “Sell in May and Go Away” was not good advice last year…
The UK Trader’s Bible:
The Complete Guide to Trading the UK Stock Market
By Dominic Connolly
Published by Harriman House Limited
The wider market also has seasonal effects, not always appreciated by traders, other than the traditional: “Sell in May and go away, come back on St Leger s day.”
New York City • Banking/Finance/Insurance • (0) Comments • Monday, November 03, 2008 • Permalink