Is it time once again for stock investors to “Sell in May and go away”?
One of the most commonly heard adages in investing comes up for discussion every year at this time. It holds that an investor can produce reliable returns at reduced risk by investing in the Dow Jones industrial average from Nov. 1 until May 1 every year and then switching into bonds for the other six months.
Although not everyone believes in this rule of thumb, it’s hard to ignore its track record.
TRACK RECORD
The five best-performing months for the Dow since 1950 are, in order, November, December, March, April and January. In other words, not a single month from May through October is a historical top performer.
The statistical payoff has been similar for the Standard & Poor’s 500 index. Not counting dividends, the S&P has posted an average gain of 6.8 percent from May through October since 1945. The gain for all other months: 4.1 percent.
REASONS IT MAY WORK
The six-month period starting in May includes the vacation-dominated stretch from Memorial Day to Labor Day that features less market activity, weighing on returns. And the rest of the year benefits from year-end bonuses, tax refunds and pension-fund contributions that translate to increased buying.
WHAT ABOUT THIS YEAR?
Many pundits see the stock market as likely to rise modestly for the rest of the year. Others anticipate a correction in light of the fact the S&P has doubled since March 2009 and is up 7 percent in 2011 alone. A key sign to watch for will be any sign of the economic recovery beginning to falter.
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Your message makes no sense!
Under TRACK RECORD, you wrote: “The five best-performing months for the Dow since 1950 are, in order, November, December, March, April and January”.
And then you wrote: “The statistical payoff has been similar for the Standard & Poor’s 500 index. Not counting dividends, the S&P has posted an average gain of 6.8 percent from May through October since 1945. The gain for all other months: 4.1 percent.
In other words, unlike the DOW which peaked November, December, January, March, and April, the S&P performed better May through October.
According to your article the DOW as well as the S&P’s statistical payoff have been similar … !?!
Please make up your mind and be more specific. Thank you.
Why on earth would any financial institution publish such an article to the average investor? Are you telling people that they should sell in May and go away? That is what you are implying and if they follow your advice, I hope they all sell ZION stock so that I can get a bargain. There is no true data that proves the curios rhyming phrase of sell in May and go away and there is no basis upon which to write and publish an article with that as the title, unless that is you are Zion’s bank who has no clue how to invest money. I like ZION’s as a bank, don’t get me wrong, but discussing investments, they have 0% place with sophisticated investors. If you ever sell and go away in a bull market or any market you miss opportunity. Please, if you would not consider yourself a sophisticated investor, disregard this article as a catchy headline, for that is what it is. Did the CEO see a copy of this? Bank with Zion’s, do not invest with Zion’s.