Sell In May And Go Away – this has been the common myth that has run within the financial world. How did this myth start? Moreover, what makes Halloween such a good time to re-enter?
The general thinking is that trading volume is low during the summer months, which causes erratic trading. So instead of wasting your time, just go away.
To be honest, none of the answers to these questions matter. What most of us simply want to know is if this idea works? The chart below shows that over the last 60 years the S&P 500 has made most of its gain between November and April.
A pretty interesting chart from Econompic shows the results of another theory – sell the S&P 500 in May and invest in the long-term Government/Credit bond index.
An interesting theory no doubt? What will you do?