Sell in May and go away - not this year?

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inbox788
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Sell in May and go away - not this year?

Post by inbox788 » Thu Apr 27, 2017 9:34 am

Besides Tax Freedom Day, https://taxfoundation.org/tax-freedom-day-2017/ , this time of year bring up the old adage:

Sell in May and go away
viewtopic.php?t=190214

I just came across this piece today that might have identified a source of the pattern, if not the source.

Opinion: Here’s the real story behind ‘sell in May and go away’
http://www.marketwatch.com/story/heres- ... 2017-04-25

Buy Equities in Winter and Sell in May in Pre-Election Years: Market Premiums and Political Uncertainty in the Presidential Cycle
https://papers.ssrn.com/sol3/papers.cfm ... id=2903067

Is this the answer? Is it actionable? Or if you believe it, inactionable this year?

If you knew for a fact the market would remain flat for for the summer and it would rise 10% in winter, where would you move or park your cash in the summer? (bonds?) How would you best invest it to maximize return in winter? (buy SPY calls that expire in 6 months with a strike price 10% higher?) If you believe the article, we've got 2 years to figure this out. But of course, if everyone knows about it, would it neutralize any such strategies?

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DartThrower
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Re: Sell in May and go away - not this year?

Post by DartThrower » Thu Apr 27, 2017 9:37 am

Not any year.
A Boglehead can stay the course longer than the market can stay irrational. It's impossible to have a bubble in common sense.

hightower
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Re: Sell in May and go away - not this year?

Post by hightower » Thu Apr 27, 2017 9:48 am

This completely goes against everything that bogleheads preach. You're trying to time the market. It doesn't work, unless you happen to get very very lucky. But, if you want to gamble with your savings, go right ahead.

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dwickenh
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Re: Sell in May and go away - not this year?

Post by dwickenh » Thu Apr 27, 2017 9:49 am

My crystal ball is not answering me today, but good luck on this one.

Best wishes,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Vanguard Fan 1367
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Re: Sell in May and go away - not this year?

Post by Vanguard Fan 1367 » Thu Apr 27, 2017 10:29 am

Twas sweet relief to buy and read John Bogle's books. Buy the market and hang on for the ride. Don't even peek at the statements till it is time to retire.

tesuzuki2002
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Re: Sell in May and go away - not this year?

Post by tesuzuki2002 » Thu Apr 27, 2017 1:54 pm

Buy in May.... and June, July, August.... etc..

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DaftInvestor
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Re: Sell in May and go away - not this year?

Post by DaftInvestor » Thu Apr 27, 2017 1:59 pm

This comes up EVERY year - and every year the same result. If you go to last years post, or the years before, or the years before, .. you will see that there are links to articles and research showing this to be a myth and you will see various folks provided answers to your questions.
On thing I read is that it really came from London Bankers who all took their vacations in June (so they would sell in May and go away).

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Clever_Username
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Re: Sell in May and go away - not this year?

Post by Clever_Username » Thu Apr 27, 2017 6:50 pm

If there's a way to successfully time the market, it isn't going to be deterministic or well-known.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, [i]Layer Cake[/i]

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k66
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Re: Sell in May and go away - not this year?

Post by k66 » Thu Apr 27, 2017 11:34 pm

inbox788 wrote: ...
If you knew for a fact the market would remain flat for for the summer and it would rise 10% in winter, where would you move or park your cash in the summer?
I might be inclined to leave my equities alone and continue taking the dividends. In fact, I know I would.

Stay the Course!
LOSER of the Boglehead Contest 2015 | lang may yer lum reek

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whodidntante
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Re: Sell in May and go away - not this year?

Post by whodidntante » Fri Apr 28, 2017 12:22 pm

The fact that everyone knows the market will go up portends a correction.

FloRidaRocky
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Re: Sell in May and go away - not this year?

Post by FloRidaRocky » Fri Apr 28, 2017 12:27 pm

Twas sweet relief to buy and read John Bogle's books. Buy the market and hang on for the ride. Don't even peek at the statements till it is time to retire rebalance.

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nedsaid
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Re: Sell in May and go away - not this year?

Post by nedsaid » Fri Apr 28, 2017 12:46 pm

People also talk about the summer rally. How can you have the "sell in May and go away" effect and also have folks talk about the summer rally? There is probably a small grain of truth to the adage but not enough to be actionable for investors. Another one of these is the "January effect." There definitely are seasonal effects with the market but they are relatively small and fluctuate from year to year. Again, not actionable. If you listened to all of this stuff, you would be so confused that you would never invest.
A fool and his money are good for business.

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Re: Sell in May and go away - not this year?

Post by Vanguard Fan 1367 » Fri Apr 28, 2017 1:00 pm

FloRidaRocky wrote:
Twas sweet relief to buy and read John Bogle's books. Buy the market and hang on for the ride. Don't even peek at the statements till it is time to retire rebalance.
You are right. I think that he made the do not peek statement because it is extremely common for folks to sell when things are going down and buy when they are going up. If you can deal with that and hang on then it would be a great idea to re-balance.

https://www.youtube.com/watch?v=Tk1woz1OQrc

stlutz
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Re: Sell in May and go away - not this year?

Post by stlutz » Fri Apr 28, 2017 3:45 pm

People also talk about the summer rally. How can you have the "sell in May and go away" effect and also have folks talk about the summer rally?
So sell on 5/1 and buy on 6/20. Thank for the tip! :sharebeer ;)

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greg24
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Re: Sell in May and go away - not this year?

Post by greg24 » Fri Apr 28, 2017 3:56 pm

The AFC won the Super Bowl, so we're in for a bear.

https://en.wikipedia.org/wiki/Super_Bowl_indicator

As of January 2017, the indicator has been correct 40 out of 50 times, as measured by the S&P 500 Index – a success rate of 80%.

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Clever_Username
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Re: Sell in May and go away - not this year?

Post by Clever_Username » Fri Apr 28, 2017 6:51 pm

greg24 wrote:The AFC won the Super Bowl, so we're in for a bear.

https://en.wikipedia.org/wiki/Super_Bowl_indicator

As of January 2017, the indicator has been correct 40 out of 50 times, as measured by the S&P 500 Index – a success rate of 80%.
Seems like a weird rule given that the Bears are in the NFC.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, [i]Layer Cake[/i]

minesweep
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Re: Sell in May and go away - not this year?

Post by minesweep » Tue Oct 31, 2017 3:43 pm

Sell in May and go away
A false adage that some convey
Getting out and getting in
To Bogleheads, a sin
It's time in the market, do not stray

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HomerJ
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Re: Sell in May and go away - not this year?

Post by HomerJ » Tue Oct 31, 2017 4:01 pm

Market is up 8.3% in the past 6 months.

Guess this year was another instance where "sell in may and go away" didn't work.

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FIREchief
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Re: Sell in May and go away - not this year?

Post by FIREchief » Tue Oct 31, 2017 4:47 pm

HomerJ wrote:
Tue Oct 31, 2017 4:01 pm
Market is up 8.3% in the past 6 months.

Guess this year was another instance where "sell in may and go away" didn't work.
Also another six months where forecasted returns based upon market valuations didn't work; but that is a whole different discussion. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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DartThrower
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Re: Sell in May and go away - not this year?

Post by DartThrower » Wed Nov 01, 2017 3:01 pm

HomerJ wrote:
Tue Oct 31, 2017 4:01 pm
Market is up 8.3% in the past 6 months.

Guess this year was another instance where "sell in may and go away" didn't work.
Incredibly, a recent article on CNBC uses the lesson of the failure of the "sell in May" adage to ... wait for it... make another market prediction! According to the article:
  • "The S&P 500 is up better than 7 percent since April 30, proving the "Sell in May" adage wrong."
  • "When the benchmark posts gains of that magnitude during the "Sell in May" period, the S&P 500 rose another 3.4 percent, on average, during November and December, according to LPL Financial research."
So the lesson isn't to disregard market timing rules of thumb, but rather to make up new rules of thumb based on what typically happens when the old ones fail! :o

The full article is here:
https://www.cnbc.com/2017/10/31/stock-m ... eriod.html
A Boglehead can stay the course longer than the market can stay irrational. It's impossible to have a bubble in common sense.

inbox788
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Re: Sell in May and go away - not this year?

Post by inbox788 » Wed Nov 01, 2017 3:24 pm

HomerJ wrote:
Tue Oct 31, 2017 4:01 pm
Market is up 8.3% in the past 6 months.

Guess this year was another instance where "sell in may and go away" didn't work.
It seems many folks are NOT reading main point of the article. It is was not supporting selling May 2017. Or 2018, but only in May 2019. The jury is still out on this one. Whether there is a real link here or it's just like the Super Bowl indicator remains to be seen. I'm open to the possibility that there is a hitting the wall at mile 20 effect at play.

You should not — I repeat, not — bet on the famous “sell in May and go away” seasonal pattern this year.
...
So if you do want to go to cash for the next six months, you will need to find other reasons besides the “sell in May and go away” pattern.

https://www.marketwatch.com/story/heres ... 2017-04-25

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