Sell in May, Go Away...

[minoo 11]

Is it a conincidence and how long since this coincidence has presented itself that it makes such startling Stats

I hope this thread is put back in perspective again sorry Tam about my ranting above (but you live and learn to earn) and Thanks MMS for your support

 

Here is another good article with an startling example (Stats from Stock Trader Almanac)

Article Title: Why some investors sell in May and go away by John Heinzl (Article was Updated on 3rd Nov)

Why some investors sell in May and go away - The Globe and Mail

 

+------------------Example extract from the above article-----------------------+

The difference is staggering. According to the Stock Trader’s Almanac, $10,000 (U.S.) invested in the Dow Jones industrial average from Nov. 1 to April 30 every year from 1950 to 2008 would have grown to $474,305, assuming the money was switched to fixed-income investments from May 1 to Oct. 31.

But if the $10,000 was invested in stocks from May 1 to Oct. 31 and parked in fixed-income for the other six months, it would have shrunk to $8,012.

+-----------------------------------------+

Though the Stats are amplified by reversing the time invested but still shocking; Any such links, insights on such Stats will be well appreciated

I need to take more heed (not heat) on my investment side of things than on trading, approaching May. Instead of Hedging ones investment / pension during May to Oct; Why not Park it into fix interest instrument, Inverse Funds, etc & reduce the Hedging burden as well buy back into better value; Makes Sense but is it doable?

 

How do you manage your trading and Investment positions during such known seasonal times ? Would like the forums opinion . .. .

 

Thankyou Minoo

[MadMarketScientist 11]

Thanks for the info -- I actually like the one tidbit in there that talks about rather than being 100% precise with it for example exactly on Nov. 1st that instead look for an exit or entry signal using whatever strategy you normally use to trade the markets. I like that a bit better than just blindly exiting/entering on those prescribed dates.

 

MMS

[minoo 11]

MMS I think they need to select particular date for Stats reason, not for actual trading;

If they would generate stats based on a Seasonal Entry / Exit Strategy as below than the results would even be more Interesting.

 

Here is a good link for Seasonality Entry / Exit

Sell in May and Go Away Seasonal Timing

 

+--------------Below is the Extract from the link----------------+

Background

Previous research on seasonality indicated that the market’s pattern of favorable seasonality begins October 1st or November 1st and ends May 1.

They discovered that those best day to enter the stock market on average is October 16 for the upcoming favorable seasonal period, and April 20 is the best day to exit from this favorable season.

 

However they emphasized that the market does not begin a rally on the same day each year, or begin to decline from a top on the same day each year. Based on this reason, they improved the strategy by using MACD to pinpoint buy and sell days.

 

Entry and exit rules: After October 16 arrives, the entry rule of this STS is that we do not enter the stock market until MACD triggers its next buy signal. After April 20 arrives, the exit rule of this STS is that we do not exit the stock market until MACD triggers its next sell signal

 

MACD: the MACD used could be found in MACD Strategy.

This strategy is also called 'Sell in May and Go Away'. Mark Hulbert has followed this strategy for many years and written peridically on it. The following is the latest article on MarketWatch.com: Should I go away or Should I play?

+----------------------------------------------+

 

Enjoy Minoo

Edited November 23, 2010 by minoo

[MadMarketScientist 11]

Agreed, that would make it more interesting and actually truer to the intent of trading with some timing element beyond just a fixed date. Hard to argue with the theory though.