Selling in May and Walking Away?

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dh
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Re: Selling in May and Walking Away?

Post by dh » Thu Apr 28, 2016 9:33 pm

GoldenFinch wrote:Too late. Yesterday was the sell day.

Seriously, don't trade by nursery rhymes, stay the course.


+1

niven
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Re: Selling in May and Walking Away?

Post by niven » Thu Apr 28, 2016 10:30 pm

I prefer "buy and hold until you're old" :D

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NateH
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Re: Selling in May and Walking Away?

Post by NateH » Thu Apr 28, 2016 11:16 pm

I wonder what Sudhi is up to these days...
4X top-twenty S&P 500 prognosticator. I'd start a newsletter, but it would only have one issue per year.

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Already sold and sailing away.

Post by itstoomuch » Thu Apr 28, 2016 11:40 pm

I started to get out in Feb. About 85% out. It's a quadrennial/octodrennial year. Could be nasty one. I don't see much more upside. I really don't have much exposure even if 100% invested.
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Re: Selling in May and Walking Away?

Post by Ari » Fri Apr 29, 2016 12:02 am

long_gamma wrote:
jebmke wrote:Is there any data based analysis that supports this strategy?


Image

YMMV

But ... all those bars show the markets went UP on average during May to October. Why would you want to get out for that?

My take:

Go buy in May
(or any day).
Then look away.

Now live! learn! play!
until one day,
your hair is grey.

Look back, and hey!
You're filthy rich.
All in, all the time.

Leeraar
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Re: Selling in May and Walking Away?

Post by Leeraar » Fri Apr 29, 2016 12:07 am

we already have an evergreen thread that is resuscitated every December. Why did my fund drop in value?

Maybe we need to add a perennial thread, Sell in May?

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

best2u
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Re: Selling in May and Walking Away?

Post by best2u » Fri Apr 29, 2016 5:29 am

My annual rebalance date comes in May. Several Mays I do sell some equities and walk away for another year. :sharebeer

Clive
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Re: Selling in May and Walking Away?

Post by Clive » Fri Apr 29, 2016 7:13 am

In the UK we have a "sell in May and come back on St. Leger Day" saying http://www.telegraph.co.uk/finance/personalfinance/investing/10780036/Does-it-really-pay-to-sell-in-May-and-came-back-on-St.-Leger-Day.html

We also have a yearly capital gains tax allowance, around $15,000 of capital gain tax exemption each year. So if you hold $100,000 of stock and its up 15%, selling the lot and rebuying again has you holding $115,000 with a tax assessment purchase cost of £115,000 (15% higher) without any tax liability. A complication however is that you can't repurchase the same asset within 30 days otherwise its discounted (considered as a round trip as though no such trade actually occurred for taxation purposes).

One thing I've noticed is that if you sell BRK-A at the start of December and rotated into UK midcap (FT250) and then switched back again at the end of December (so as not to break the less than 30 day trading rule), then since 1986 that predominately BRK-A holding would have annualised 2% more than simple buy and hold of BRK-A.

That may have something to do with US tax reporting years being calendar compared to UK's April financial years. Or Christmas rally ... or whatever. Or could simply just be a case of that's just a historic pattern that might not persist into the future. Who knows. The May or May to St Ledger's horse race meeting (September) is just a case of those months on average yielded historic gains that were to the left/lower end of the spectrum, other month(s) were to the right/upper end of the spectrum. Maybe down to geopolitical or financial calendar events, maybe just the luck of the draw. If there are other benefits from playing that game then potentially a worthwhile endeavour, such as being able to lock in capital gain tax exemption allowance. If not then likely better to not bother as could just be a drag factor (trading costs).

long_gamma
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Re: Selling in May and Walking Away?

Post by long_gamma » Fri Apr 29, 2016 7:15 am

Ari wrote:
long_gamma wrote:
jebmke wrote:Is there any data based analysis that supports this strategy?


Image

YMMV

But ... all those bars show the markets went UP on average during May to October. Why would you want to get out for that?



Where did i say to get out?

Some one asked for the data, so I presented the data.

Total averages also lie. Average up during Nov to Apr is about 1.7% higher than May to Oct and average down during May to Oct is also higher about 1.5% than Nov to Apr.

My hot take, if you are an long term investor then stay there to extract risk premium. If you are an trader atleast reduce leverage.
Last edited by long_gamma on Fri Apr 29, 2016 7:25 am, edited 1 time in total.
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Ari
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Re: Selling in May and Walking Away?

Post by Ari » Fri Apr 29, 2016 7:22 am

long_gamma wrote:Where did i say to get out?

Well, the question asked was "Is there any data based analysis that supports this strategy?", presumably meaning the "Sell in May" strategy. The data presented doesn't seem to support such a strategy, since the market goes up, on average, in the May-October period.

Regardless, though, it's interesting data. Thanks for sharing!
All in, all the time.

Da5id
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Re: Selling in May and Walking Away?

Post by Da5id » Fri Apr 29, 2016 7:24 am

Sell in haste, repent at leisure?

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Re: Selling in May and Walking Away?

Post by mmcmonster » Fri Apr 29, 2016 7:40 am

Steadfast wrote:When the markets are down, I buy relatively more equities. When the markets are hot, I sit back and wait. But, I never sell core positions. In 25 years we can compare notes and see who had a more successful strategy. Good luck. You're going to need it.


I'm in the acquisition stage of investment. I'm not selling anything (hopefully for another decade) and will buy what I need to, in order to keep my asset allocation as close as possible to where I want it (Currently 65% Total Stock, 5% International, and 30% Bonds).

If the stock market takes a tumble for a few months, I buy more stocks. If it gets bullish, I buy bonds.

At least, that's my plan. :happy

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Taylor Larimore
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Misleading charts and fund returns

Post by Taylor Larimore » Fri Apr 29, 2016 9:42 am

All those bars show the markets went UP on average during May to October. Why would you want to get out for that?

Ari:

Not only did all the bars go UP during May to October, but if we add dividends to the index
we can add at least 2% to the figures.

Charts and figures showing past returns without dividends are very misleading.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

chicagoan23
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Re: Selling in May and Walking Away?

Post by chicagoan23 » Fri Apr 29, 2016 9:55 am

Thank you BH community for the many slaps of common sense that I needed......

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Re: Selling in May and Walking Away?

Post by goingup » Fri Apr 29, 2016 10:02 am

NateH wrote:I wonder what Sudhi is up to these days...

That's the poster I was trying to remember! Sudhi would often foretell of the coming "unfavorable season". Maybe he grew tired of being mocked here.

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Re: Selling in May and Walking Away?

Post by feh » Fri Apr 29, 2016 11:40 am

chicagoan23 wrote:I am thinking of moving equities down from about 75% of my portfolio to maybe 60%....Just wondering if others are thinking along those same lines.


Absolutely not.

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Christine_NM
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Re: Selling in May and Walking Away?

Post by Christine_NM » Fri Apr 29, 2016 12:02 pm

Many of you are too young to remember, but the bull market of 1982-2000 began in August 1982.

I remember because I started saving thru an employee savings plan as soon as eligible, in September 1982. I put it all in diversified stock, i.e. S&P 500. What timing.

OP, your job is to save and invest, not to time the market.
10% cash 45% stock 45% bond. Retired, w/d rate 1.5%

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Re: Selling in May and Walking Away?

Post by tyler_cracker » Fri Apr 29, 2016 12:09 pm

NateH wrote:I wonder what Sudhi is up to these days...


this character is from before my time (going back to the diehards days), so i couldn't resist a little folkloric research. s/he showed up here after the move and started a couple of... interesting threads:

The markets are in their unfavorable season!
The phony bull-market from 2002 to 2007

long_gamma
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Re: Misleading charts and fund returns

Post by long_gamma » Fri Apr 29, 2016 12:43 pm

Taylor Larimore wrote:
All those bars show the markets went UP on average during May to October. Why would you want to get out for that?

Ari:

Not only did all the bars go UP during May to October, but if we add dividends to the index
we can add at least 2% to the figures.


I already addressed that question to Ari. That chart is just showing under-performance of SPX from May to October compared to November to April. Do you think if you add dividends to both series, under-performance will go away?

Secondly, if you assume one sells in may and reinvest in October, do you think that money will stay under mattress? 10 year Bond yields were higher than stock yields during most of that period. I did not look at total return of the notes during that period. I am positive that it will be closer to SPX returns including dividends for that period.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson

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Re: Selling in May and Walking Away?

Post by peppers » Fri Apr 29, 2016 7:22 pm

tyler_cracker wrote:
NateH wrote:I wonder what Sudhi is up to these days...


this character is from before my time (going back to the diehards days), so i couldn't resist a little folkloric research. s/he showed up here after the move and started a couple of... interesting threads:

The markets are in their unfavorable season!
The phony bull-market from 2002 to 2007



Some very interesting exchanges...thanks for the stroll down memory lane.
"..the cavalry ain't comin' kid, you're on your own..."

Novine
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Re: Selling in May and Walking Away?

Post by Novine » Fri Apr 29, 2016 8:49 pm

There was a lot of talk about the Presidential election in 2012 was going to be bad for the markets. See how that turned out.

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Re: Selling in May and Walking Away?

Post by long_gamma » Sat Apr 30, 2016 5:00 am

Novine wrote:There was a lot of talk about the Presidential election in 2012 was going to be bad for the markets. See how that turned out.


Oh come on. Let me know how did 2008 turned out.

Data is the Data. Either you place trade based on it or you don't. For any strategy there will be some years of over performance and some years of under-performance.

DJIA has more than 100 years of data. If it is consistent across last 50 years and 20 years, trader will trade off of it. Presidential cycle has 1/4 less data and then if you filter based on whether democrat or republican during the cycle, you have 12 or 13 data points. How confident are you on those data?

There are some data series, which has limited numbers of data(like Emerging markets for instance) but taken as gospel. Even the longest series data in portfolio visualizer (very good tool) goes back to 1972 and most series are very limited. Some here even look for "Factors" based 2-3 years of data. These are taken as acceptable around here. But when the market adage based on 100 years of data, they are dismissive of it.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson

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max12377
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Re: Selling in May and Walking Away?

Post by max12377 » Sat Apr 30, 2016 5:39 am

Invest in May, look away, then go out and play

.. and while your money goes away ..
.. keep your worries at bay..
.. and just wait another day..
.. but if it's still not going your way..
.. you might want to stop and pray..

-Have a good day. :sharebeer

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Re: Selling in May and Walking Away?

Post by joebh » Sat Apr 30, 2016 6:05 am

chicagoan23 wrote:Can someone please talk some sense into me......


It rhymes, so it has to be right!

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nisiprius
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Re: Selling in May and Walking Away?

Post by nisiprius » Sat Apr 30, 2016 6:07 am

chicagoan23 wrote:I know this "old saw" of a topic has come up in BH forums many times, and I know that it goes against the entire BH philosophy, and I know that data has shown it to be a strategy that doesn't work long-term, and I know that a long-term investing horizon makes short-term moves a blip on the radar, and I know moving out of the market is easy, but timing the return to the market is very, very hard.
Yes.
That said...
Oops. And you were doing so well...
I think we saw some of that sentiment (of wanting to take money off the table because the calendar is flipping to May) starting in the markets today...
I really wish you had phrased this differently and said "I am feeling jittery, which might mean my stock allocation is too high." Instead, it seems possible to me that you have projected our own feelings onto the market and seem to believe one or all of these three things:
a) You are personally in tune with "the sentiment" of the market;
b) You believe that "sell in May and go away" is a statistically valid effect that has not gone away even though everybody knows about it; or,
c) You don't believe it yourself yet you believe that everybody else believes it (or that everybody else believes that everybody else believes it, or...)

If you are jittery it might mean that your stock allocation is too high.

Rather than debate the merits of an old saw (that might possibly refer to the logistics of sea voyages to Europe in the days of Marconigrams), you should say to yourself "I'm jittery because I chose a stock allocation that's a little too high, and I now realize that I really dislike the high end of normal volatility," and see whether it feels true when you say it out loud.

If it's too high, then it is certainly better to cut it back at a time that is not during a sharp downturn. I would suggest though that you do the absolute minimum that you can bear to do, just enough to scratch the itch to "do something," and that you think of it is a permanent new target allocation (i.e. not a tactical move, not making a big cut now because of your believe that "the market" is "selling in May" with the idea of buying back in at "the right time."

You can find a saw or aphorism to match anything you want to do, so you can always mutter "Nobody ever went broke take a profit," but the one that I really believe is valid is John C. Bogle's "Time is your friend. Impulse is your enemy."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Selling in May and Walking Away?

Post by Boglegrappler » Sat Apr 30, 2016 8:38 am

It seems most Bogleheads have much of their net worth in their non-taxable accounts, so selling in May and buying at the end of the year won't hurt tax wise as much as it would in your taxable account.

But for those of you who are mathematically inclined good at excel, I encourage you to model two scenarios at various steady state rates of return. One where you never sell and repurchase, and the second where you sell and pay the gains taxes each year. You'll quickly see that the annual taxation aspect consumes an awful lot of return. Not to mention transaction costs.

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Re: Selling in May and Walking Away?

Post by arcticpineapplecorp. » Sat Apr 30, 2016 8:41 am

"OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February." -- Mark Twain

In other words, picking a month, any month to decide to sell is speculating, not investing. Do not let the behaviors of short term traders determine your investment strategy. Do you have one...an IPS, that is? What does it tell you to do? If not, see the link below and please come up with an IPS. If you have one, and if you follow it, it should keep you from listening to what others are doing.

https://www.bogleheads.org/wiki/Investm ... _statement

By the way, if everyone knows to "sell in May" then wouldn't that be reason enough to start selling in April instead? Don't you think others have considered that too? Where do you think that kind of thinking leads? To selling in March instead, then February, January...and so on. Which confirms Mark Twain's sentiment above.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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arcticpineapplecorp.
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Re: Selling in May and Walking Away?

Post by arcticpineapplecorp. » Sat Apr 30, 2016 8:47 am

By the way, if you haven't seen the graph below take a good long look at it. In every year there were pullbacks from previous highs (known as intra-year declines). The average pullback or loss experienced was 14.2%, but do you see that the markets still ended UP more than down over this time period (27 out of 36 years). So even though losses can occur WITHIN a year, doesn't mean the year (or investment period for that matter) can't end UP. This is why time IN the market is so much more important than TIMING the market.

from:
https://am.jpmorgan.com/us/en/asset-man ... ets/viewer
Image
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: Selling in May and Walking Away?

Post by snarlyjack » Sat Apr 30, 2016 8:56 am

Here is my financial plan...

1). I'll never sell.
2). I just buy.
3). If the market goes down...buy more.
4). I dca like crazy.
5). I think the market is going to be much, much, higher in my lifetime.
6). My hold time is forever...through thick & thin...I just buy!
7). I don't care what happens, or how weird it is...I just buy & hold.
8). I'm convinced this is the really the true path to wealth!
Good luck :sharebeer

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Re: Selling in May and Walking Away?

Post by lostdog » Sat Apr 30, 2016 9:14 am

I am staying the course.
"Our life is frittered away by detail. Simplify, simplify." -Thoreau

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Re: Selling in May and Walking Away?

Post by midareff » Sat Apr 30, 2016 9:33 am

and exactly what date was it that you became able to predict this years market, and please share the next 7 months with us, month by month.

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Re: Selling in May and Walking Away?

Post by linenfort » Sat Apr 30, 2016 10:02 am

Last night on PBS, Bob Pisani showed that selling in May actually makes sense. Most money really has been made between November and April. At the same time, it is not recommended for most investors. And who knows if it will hold true in the future? No one.
Did anyone else play Acquire as a child?

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Re: Selling in May and Walking Away?

Post by cheese_breath » Sat Apr 30, 2016 12:27 pm

linenfort wrote:Last night on PBS, Bob Pisani showed that selling in May actually makes sense. Most money really has been made between November and April. At the same time, it is not recommended for most investors. And who knows if it will hold true in the future? No one.

So the most money is made between November and April. And the rest is made when?
The surest way to know the future is when it becomes the past.

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Re: Selling in May and Walking Away?

Post by minesweep » Sat Apr 30, 2016 2:25 pm

You may have hell to pay if you sell in May. Come December you may be shouting: “Mayday, Mayday, Mayday”.

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Re: Selling in May and Walking Away?

Post by happyisland » Sat Apr 30, 2016 6:37 pm

tyler_cracker wrote:
NateH wrote:I wonder what Sudhi is up to these days...


this character is from before my time (going back to the diehards days), so i couldn't resist a little folkloric research. s/he showed up here after the move and started a couple of... interesting threads:

The markets are in their unfavorable season!
The phony bull-market from 2002 to 2007


Wow. Thanks for the links! It was very interesting to go back and see how people were acting and behaving during the last market meltdown. There are some good reminders on how not to act in there.

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stemikger
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Re: Selling in May and Walking Away?

Post by stemikger » Sat Apr 30, 2016 6:53 pm

No, no and no. Pick an asset allocation, don't peek and as always, Stay the Course. Why make such an elegant and simple way to invest hard?
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

tyc
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Re: Selling in May and Walking Away?

Post by tyc » Sun May 01, 2016 8:57 am

How about this SOS method.

STAY in the market, OBSERVE market activities, and when the time is right SELL (market finally falling - like a bear market).

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Re: Selling in May and Walking Away?

Post by quantAndHold » Sun May 01, 2016 9:08 am

Seasonality is a real thing, and there are traders that actually make money on it. Not just the May-October thing, but buying and selling on certain days of the month, week, etc, give statistically significant excess returns. Some of the reasons even make sense when you look at the calendar of financial events (401k buying on a monthly schedule, for example).

The thing is, though, that I'm an investor, not a trader. So I stay invested. Also, that seems like a lot of work.

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Re: Selling in May and Walking Away?

Post by linenfort » Sun May 01, 2016 9:11 pm

cheese_breath wrote:
linenfort wrote:Last night on PBS, Bob Pisani showed that selling in May actually makes sense. Most money really has been made between November and April. At the same time, it is not recommended for most investors. And who knows if it will hold true in the future? No one.

So the most money is made between November and April. And the rest is made when?


You only get one guess. :wink:
Did anyone else play Acquire as a child?

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William4u
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Re: Selling in May and Walking Away?

Post by William4u » Sun May 01, 2016 9:23 pm

At the end of May, 2/3 of the time the market will be up, and 1/3 down (like any other month).

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cheese_breath
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Re: Selling in May and Walking Away?

Post by cheese_breath » Sun May 01, 2016 9:41 pm

linenfort wrote:
cheese_breath wrote:
linenfort wrote:Last night on PBS, Bob Pisani showed that selling in May actually makes sense. Most money really has been made between November and April. At the same time, it is not recommended for most investors. And who knows if it will hold true in the future? No one.

So the most money is made between November and April. And the rest is made when?


You only get one guess. :wink:

Exactly. So Bob Pisani must be wrong. :happy
The surest way to know the future is when it becomes the past.

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Taylor Larimore
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Re: Selling in May and Walking Away?

Post by Taylor Larimore » Sun May 01, 2016 9:52 pm

Bogleheads:

"Selling in May and Walking Away" is a form of market-timing. This is what our mentor, Jack Bogle, says about that:
After nearly 50 years in this business, I do not know of anybody who has done market timing successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.

Forgetaboutit.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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NateH
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Re: Selling in May and Walking Away?

Post by NateH » Sun May 01, 2016 11:46 pm

peppers wrote:
tyler_cracker wrote:
NateH wrote:I wonder what Sudhi is up to these days...


this character is from before my time (going back to the diehards days), so i couldn't resist a little folkloric research. s/he showed up here after the move and started a couple of... interesting threads:

The markets are in their unfavorable season!
The phony bull-market from 2002 to 2007



Some very interesting exchanges...thanks for the stroll down memory lane.


Just goes to show that these "schemes" are like ants:
they come back every spring and should be dealt with with extreme prejudice.
4X top-twenty S&P 500 prognosticator. I'd start a newsletter, but it would only have one issue per year.

long_gamma
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Re: Selling in May and Walking Away?

Post by long_gamma » Mon May 02, 2016 8:01 am

quantAndHold wrote:Seasonality is a real thing, and there are traders that actually make money on it. Not just the May-October thing, but buying and selling on certain days of the month, week, etc, give statistically significant excess returns. Some of the reasons even make sense when you look at the calendar of financial events (401k buying on a monthly schedule, for example).

The thing is, though, that I'm an investor, not a trader. So I stay invested. Also, that seems like a lot of work.


+1.

Any time, significant portion of money is moved out of an asset class based on seasonal, valuation etc, it is a trading strategy not an investment strategy. Many miss this simple fact come up with silly rebuttals like what about year X, predict every month for next 7 months (whaat?, while we are at it can we get prediction for every day too), my classic favorite is dividends with out thinking about alternate use of the money.

Even trader who follows this strategy does not sell 100% of stocks and sits in cash and comes back at the end of October. Probably this will be one among many of his trades as they also diversify their trades. Also there are many ways to structure this trade too.(for ex. buying upside call and sell or short ES)

Good article on WSJ regarding the same topic.

http://www.wsj.com/articles/sell-stocks ... 1462095004

One interesting fact in that article "In the U.K., where data goes back three centuries, investors who follow that strategy for five years have an 80% chance of beating the market, based on his historical analysis. Over 10 years, it becomes a 90% chance. His results exclude transaction costs and taxes."

Taylor Larimore wrote:Bogleheads:

"Selling in May and Walking Away" is a form of market-timing. This is what our mentor, Jack Bogle, says about that:


Funny thing about that quote, Jack Bogle should look himself in the mirror. He is one of the great market timer.

viewtopic.php?f=10&t=174938&p=2646668#p2646668

"In 1999, when the market was idiotic- it just made no sense I went from 65% Bonds and 35% stocks from 20% bonds and 80% stocks". Their goes "think of the children (dividends)" argument.

viewtopic.php?t=27087

"Jack urged caution in 1999 and 2007, indicating that market risk was high. He reduced his equity allocation (due to extremely high valuations) to about 40% in 1999 and stated so. He recently said that he has about 30% in stocks." Adrian Nenu 2008

Action speaks louder than some canned quotes.

Speaking of which what ever happened to Adrian Nenu. Even good guys like Adrian, sscritic were silenced for not towing the company line, where as "sudhi" and "markettimer" is trotted out frequently.
viewtopic.php?f=10&t=68463
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hardrain
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Re: Selling in May and Walking Away?

Post by hardrain » Mon May 02, 2016 8:33 am

ResearchMed wrote:
blueblock wrote:The Economist Intelligence Unit puts out a monthly overview, the latest dated last week. The summaries are available free.

http://gfs.eiu.com/Article.aspx?article ... 40&secId=4

You'll forgive me if I take their forecast over yours. :P


That's some mighty specific forecasting by the fine folks at The Economist.

But wait... " Although our central forecast is that the business cycle will end in 2019, an external shock could bring it to a halt sooner"!

Ah yes, those dratted unpredictable external shocks...
("Other than that, Mrs. Lincoln...?")

So I guess one either stay or not stay in May.
Or not.
:annoyed

RM


May 2019 sounds like a good time to buy! :D

But in some seriousness, even if just for better being able to enjoy the entertainment value of predictions like this, what does it mean and how does one go about determining when "the business cycle" ends? I'm guessing the moons or something?

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linenfort
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Re: Selling in May and Walking Away?

Post by linenfort » Mon May 02, 2016 8:54 am

cheese_breath wrote:
linenfort wrote:
cheese_breath wrote:
linenfort wrote:Last night on PBS, Bob Pisani showed that selling in May actually makes sense. Most money really has been made between November and April. At the same time, it is not recommended for most investors. And who knows if it will hold true in the future? No one.

So the most money is made between November and April. And the rest is made when?


You only get one guess. :wink:

Exactly. So Bob Pisani must be wrong. :happy


Well, I think the rest was something like 0.46% Even though I do not subscribe to the "sell in May" strategy, I think he's right when he says "most."
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Leeraar
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Re: Selling in May and Walking Away?

Post by Leeraar » Mon May 02, 2016 11:03 am

I was putting together a talk for our local Bogleheads chapter, and I came back to thinking again about the Efficient Market Hypothesis.

In a nutshell, all current knowledge is priced into the market. Think about that, it's really quite powerful. For one thing, it implies market timing is futile. Also, the Jim Cramers of the world don't know anything that a lot of other people also know. So, tune them out. Ignore them. What they know is already in the price.

The other thing about market timing is you have to be correct twice: When to buy/sell and then when to sell/buy. I have a friend who "correctly" made the call at the beginning of 2008 and went all to cash. Problem is, he has not yet seen a buy signal. He is now far worse off than if he had done nothing.

[soapbox]
The other thing is, this stuff comes nowhere near to passing logical scrutiny. You cannot use the data to discover an hypothesis, and then claim the data fits the hypothesis! Scientific Method 101.
[/soapbox]

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DaftInvestor
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Re: Selling in May and Walking Away?

Post by DaftInvestor » Mon May 02, 2016 11:56 am

You've come to the wrong place to discuss market timing...

I recently read that the original "Sell in May and go away" rhyme came from London stock traders back when they used to all go on vacation in May and June. Wherever it originated - there is no substantial data to time the market with (over a summer slump or otherwise).

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Re: Selling in May and Walking Away?

Post by Leeraar » Mon May 02, 2016 12:09 pm

DaftInvestor wrote:You've come to the wrong place to discuss market timing...

I recently read that the original "Sell in May and go away" rhyme came from London stock traders back when they used to all go on vacation in May and June. Wherever it originated - there is no substantial data to time the market with (over a summer slump or otherwise).

In German it would be:
Verkaufe im Mai und geh weg

Not quite a snappy rhyme.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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HomerJ
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Re: Selling in May and Walking Away?

Post by HomerJ » Mon May 02, 2016 2:58 pm

tyc wrote:How about this SOS method.

STAY in the market, OBSERVE market activities, and when the time is right SELL (market finally falling - like a bear market).


Umm no.

Because you can't tell when a bear market is starting until after it's already dropped.

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