Seeking Alpha
Profile| Send Message|
( followers)  

It seems everyone knows the "sell in May go away" cliché on Wall Street these days, now including the retail home gamers. Not going to lie, those who believed in the sell and May go away motto over the past two years has saved a lot of headaches and returns. If you sold back on April 31st of 2010, you missed the flash crash, and double digits losses during the summer months. If you sold on April 31st of 2011, you missed the double digit losses of debt downgrades.

However, does everyone know about the first quarter double digit cliché?

This cliché that I have been hearing on the trade desks and on other media outlets is, "if the first quarter is up double digits, the year to date return is almost always positive." The keyword here folks is almost. Take a look at this table below:

Year

1Q Return

Full Year Return

1930

18%

-24.9%

1943

19.8%

25.9%

1961

12.8%

26.9%

1967

13.2%

24%

1975

23%

37.2%

1976

15%

23.9%

1987

21.4%

5.3%

1998

14%

28.6%

The one key fact to take away from this table is this year is going to be a volatile one whichever way it trades. Yes, the odds are in your favor that the market will power forward this year with very strong gains, but what about 1987 or 1930? Those years the market was doing very well in the first quarter also. With the European debt problems ready to take center stage with Spain and Italy now, I am not willing to take the chance of having one of these years off the table yet. I remember all too well the past two years of gains heading into April as well, just to be all evaporated and more.

Source: Sell In April Go Away?