The first trading day of May is an opportune time to review the ‘sell in May’ or ‘Halloween effect.’ Both of those refer to the historical evidence that shows the stock market tends to underperform from May through October verusus the November through April period. There are a number of potential explanations for this phenomenon, but no clear answer. With the stock market hitting new highs and positive news, i.e. the demise of Osama bin Laden, there is always the potential for a trend change. Most investors would not use seasonality in isolation, but it can be a part of a broader investment strategy. In today’s screencast we look at a handful of posts on the potential for a ‘sell in May’ effect this year.
Items mentioned in the above screencast:
What happens to ‘sell in May‘ when the Fed isn’t accommodative. (Big Picture)
Keep an eye on the US dollar for a signal to ‘hedge in May.’ (Pragmatic Capitalism)
What sectors historically ignore the Halloween effect? (Marketwatch)
The Halloween effect is one of a couple of ‘pure calendar effects.’ (CXOAG)