Sell in May and go away

Pekelo

Pekelo

1. Generally the stats don't lie.

https://en.wikipedia.org/wiki/Sell_in_May#:~:text=Sell in May and go,average than the other months.

2. Government shutdown after June 1st, because they won't reach an agreement.

3. Hollywood strikes signaled a market downturn 8/9 times. The WGA has started its strike today.

4. Last year the SPX went from similar levels like today down to 3700 by 2nd week of June and to 3500 by early Oct.

5. 2 years ago, when the market rallied during the whole summer, you only missed 80 SPX points between May to October's drop. From that October's low SPX went up 500 points in the following 3 months.

www.reddit.com/r/wallstreetbets/comments/135bw5v/hollywood_strike_tomorrow_is_predicting_a_us/

Between today and end of October I expect a minimum 10% drop for the SPX. Today 4167, so close to 3700.

I will do some research on it later, but from the above Wiki link:

" Andrade, Chhaochharia and Fuerst (2012) found that the seasonal pattern persisted. In the 1998–2012 sample on average November–April they found that returns are larger than May–October returns in all 37 markets they studied. On average, the difference is equal to about 10 percentage points. "
 
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Sell in May and go away - eliteinvestor.com

Buy low sell high,
Sell high buy low
in all months - elitetrader.com



Don't work in May - eliteinvestor.com

Any month is a good month - elitetrader.com
 
Last 5 years, no market timing involved or assumed, just blindly going away and buying back sometime at the October's lows:

2018: The market rallied during the summer, but gave it all back by Oct, so nothing was lost by not being long.

2019: Huge drop right away in May. Sideways movement until Oct. Nothing lost.

2020: Market rallied, sold off in Sept, missed out on 400 pts.

2021: Market rallied, sold back in the autumn, about 80 pts were missed.

2022: Market dropped 4-500 points, so that could have been saved.

So using just the last 5 years, it is a breakeven for long term holders.
 
Pekelo said:
Last 5 years, no market timing involved or assumed, just blindly going away and buying back sometime at the October's lows:

2018: The market rallied during the summer, but gave it all back by Oct, so nothing was lost by not being long.

2019: Huge drop right away in May. Sideways movement until Oct. Nothing lost.

2020: Market rallied, sold off in Sept, missed out on 400 pts.

2021: Market rallied, sold back in the autumn, about 80 pts were missed.

2022: Market dropped 4-500 points, so that could have been saved.

So using just the last 5 years, it is a breakeven for long term holders.
More...

There was a study that showed that something like 90% of the SPX gains are from Nov to May (or thereabouts).
 
https://fullyvested.com/insights/st-legers-day-sell-may-go-away/
https://www.reuters.com/article/us-usa-stocks-weekahead-idUSKCN1IJ2HE
https://bluegrassam.com/wp-content/uploads/2020/05/Sell20in20May202020.pdf
2023-05-02_161247.jpg

There's no question that the November through April period has provided substantially better returns. Whether you average it out, annualize it, or compound it, there is clearly a significant spread between the average six-month returns during these contrasting seasonal periods. Market Seasonality Notes:
• Since April 30th, 2000, the Dow Jones Industrial Average (DJIA) has gained over 125%. However, the Index is up just over 1.62% when we isolate the seasonally weak periods.
• 2019 (November 2019 – April 2020) was the worst seasonally strong period since 2008 and the fourth worst on record.
• During the seasonally weak May to October periods, 27 out of the 70 years examined finished down, while there were only 15 years during which the seasonally strong period produced a negative return.
• There have been only three years when the "good six months" have lost more than 10% (1969, 1973 and 2008), while the "bad six months" have seen losses of 10% or more 11 times. The most recent “good six months” missed joining the list of double-digit losers by just a couple of basis points.
• There have been 15 instances since 1980 where the "good six months" have posted a doubledigit return, with five of those returning more than 20%.
• Interestingly enough, following the times when the "bad six months" did produce double-digit losses (11 total since 1950), the "good six-month" period afterward lost more than 1% only once (2008) and on four occasions, actually posted double-digit positive returns (1962, 1966, 1971, & 1974)
• Beginning in November 2009, the Dow experienced a streak of four consecutive positive doubledigit efforts during the strong six-month periods, the second-longest such streak in history. The first began in 1994 where the Dow finished the seasonally strong period with double-digit gains for five consecutive periods
 
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