“Halloween Indicator” More Trick than Treat

In a recent MarketWatch article, columnist Mark Hulbert suggests that those buying into the so-called “Halloween Indicator”—that is, a six-month upside for stocks—may be disappointed. “That pattern is based on the historical tendency for the stock market to produce the bulk of its gains between Halloween and the following May Day,” notes Hulbert, adding that the tendency “traces almost exclusively to the third years of the U.S. presidential four-year cycle. In the other three years… Read More

Sell in May, But Not in the U.S.A.

Outside the U.S., there may be some credence in the saying, “sell in May and go away,” according to a recent article in Bloomberg. “A look at 30 years of data across a variety of assets and geographies shows that while American stocks tend to show positive returns over the May-to-mid-September period, those in Asia and Europe don’t.” According to Bloomberg calculations, the article reports, the 30-year average return of the MSCI Asia Pacific Index from… Read More

Hulbert: Large Caps Now and Small Caps in January

Small-cap stocks outperform large caps, on average, over the long term, but almost all the small-cap advantage occurs in the early part of the year. This according to a recent MarketWatch article by Mark Hulbert. “As you can see from the chart below,” he writes, “their advantage gradually diminishes as the year progresses, and is actually negative by the last quarter of the year.” The widely-accepted theory on the relative performance of these two asset… Read More

Batten Down the Hedges?

August, typically one of the slowest months for Wall Street, has the reputation for being one of the more unstable for the financial markets. This according to an article in last week’s Investment News., which reported that last week DoubleLine Capital chief executive Jeffrey Gundlach suggested gold and gold miner stocks as a hedge against “the mounting risk across virtually all other markets and asset classes.” Gundlach says, “the stock markets should be down massively… Read More

Sell In May Works — But Be Careful

In his latest column for Canada’s Globe and Mail, Validea CEO John P. Reese says that while the “Sell in May” phenomenon seems to be a real force in the stock market, investors should be careful about trying to profit from it. The saying, which dates back to the 18th century, is today seen as a warning to stay out of the stock market between May and Halloween. And, Reese says, there is a good… Read More

Sell-in-May Effect Appears Real

Joachim Klement, a trustee of the CFA Institute Research Foundation, concludes in The Enterprising Investor that the “sell-in-May effect” (also known as the “Halloween indicator”) “seems real and persistent.” As Klement explains, this well-known calendar effect “holds that investors can outperform a simple buy-and-hold strategy by selling stocks at the beginning of May and buying them back at the beginning of  November.” Sven Bouman and Ben Jacobson found that for the period January 1970 to… Read More