Home > article, investing, market, stock > Pre-empt those “sell in may and go away?”

Pre-empt those “sell in may and go away?”

Will seasonal factor work this time round? Those who sold their shares last May had a heart pain seeing the market go all the way up. But that may be because the world economy just happen to rebound from a recession. And hence it is very compelling for people to buy no matter what happens.

But now after a good whole year of run, stock has become expensive. And hence the compelling reason to buy stock will not be there. So this may, what will happen?

From MarketWatch
Should you try to get a head start on those who are planning “sell in May and go away?”

If so, then you will be looking for an opportunity to sell your stocks in April and go to cash, thereby beating the many investors who will instead wait until a month from now.

But before you rush to sell everything, bear in mind that the odds of success are quite low. Stock market timers in general have very poor success rates, rarely doing better over the long term than simply buying and holding. Why would we think that they can do any better timing their entries and exits in October and April than in any other month of the year?

Well, the proof of the pudding is in the eating.

And over the past eight years, one of the two market timing services that I monitor that regularly second-guess the “Sell in May and Go Away” system has significantly increased that seasonal pattern’s performance. While the other one has not improved on the Halloween Indicator, it at least hasn’t done appreciably worse — and has still beaten a buy-and-hold strategy.

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