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Sell in May and go away? It's typically a good idea, according to stats from Jeffrey Hirsch. If...

Sell in May and go away? It's typically a good idea, according to stats from Jeffrey Hirsch. If you put $10K into the market on Nov. 1, 1972, and sold everything on April 30 and rebought on Nov. 1 every year, you'd have more than $160K today - average annual return: 7.4%. If you’d done the reverse, investing every May 1 and selling every Oct. 31, you’d have $7,863 - average return: 0.4%.
Comments (10)
  • Tschurin
    , contributor
    Comments (313) | Send Message
    Deceptive...the more likely alternative to selling in May would not be doing the reverse but rather just holding throughout the entire period. Since the May-through-October period is positive, albeit only slightly, you would have been better off holding throughout the period, especially if it was a taxable account, since selling before May and buying before November would have incurred both taxes and commissions.
    28 Apr 2011, 06:06 PM Reply Like
  • Rohan C. Pease
    , contributor
    Comments (186) | Send Message
    How is it possible to have a positive return and end with less principal then when you started. $7,863< $10,000
    28 Apr 2011, 06:16 PM Reply Like
  • Hoopono
    , contributor
    Comments (218) | Send Message
    This is a total crock! Exactly what "market" did Mr. Hirsch put his imaginary $10,000? There have been numerous studies on this concept and when one pays attention to the specifics and checks the math the facts are clear that this saying is pure nonsense. But I guess it does help sell overpriced almanacs that are full of other misleading crap!
    28 Apr 2011, 06:21 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
    Yes, but the saying rhymes.


    Rhyming is important.


    Analyst = failed rapper.
    28 Apr 2011, 06:31 PM Reply Like
  • DavyJ
    , contributor
    Comments (414) | Send Message
    Not a "total crock". This link references several studies that support the idea.


    28 Apr 2011, 07:03 PM Reply Like
  • snafubar
    , contributor
    Comments (2) | Send Message
    Agree, here's a good history of the DOW since 1949 too - starting page 3...
    28 Apr 2011, 08:20 PM Reply Like
  • Stephen Frankola
    , contributor
    Comments (172) | Send Message
    yeah. there has to be some sort of typo or mistake somewhere
    28 Apr 2011, 11:30 PM Reply Like
  • Guardian3981
    , contributor
    Comments (1927) | Send Message
    Maybe he is using present values so the 7,863 is actually the present value of some other future value number.
    28 Apr 2011, 06:53 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
    Dr. Martin J. Pring in his seminal book: "Introduction to Technical Analysis" did provide a treatise on the so-called "Seasonal Factors", providing some statistical evidence advocating the month of May be the weakest, and the months of December, January be the strongest for the stock market.


    His rationale is that the December month tends to coincide with heavy annual distribution of both short- and long-term capital gains, and dividends. Prices in stocks, bonds, and mutual funds would then trade ex-dividend beginning in the January, enticing investors to jump in thinking they are bargains. He also attributed the May weakness to other credible seasonal industrial, agricultural, and financial factors.
    28 Apr 2011, 09:06 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
    You can not time the market. Market will make fool out of everybody.
    28 Apr 2011, 09:09 PM Reply Like
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