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Crypto Markets: “Sell in May, and Go Away” — What Does It Mean
The historical pattern known as the “Sell in May, and Go Away” seasonal divergence was popularized by the Stock Trader’s Almanac, which stated that investing in stocks represented by the Dow Jones Industrial Average from November to April and switching to fixed income for the other six months “has delivered reliable returns with reduced risk since 1950.” What is “Sell in May, and Go Away”? “Sell in May, and Go Away” is a well-known saying in finance. It is based on the historical underperformance of stocks over the six-month period from May to October. According to Fidelity Investments, the divergence has been most pronounced in recent years, with the S&P 500 (SPX) gaining an average of about 2% from May to October from 1990 onwards over the next 30 years, compared with an average of about 7% from November to April. The Halloween Indicator, 'Sell in May and Go Away': Everywhere and All the Time*, a research paper examining stock markets outside the US, found the same pattern, calling the seasonal divergence trend "surprisingly resilient." Key Takeaways 👉 "Sell in May and go away" is a saying that refers to the historically weaker performance of financial markets from May to October compared to the other half of the year. 👉 Investors can try to capitalize on this pattern by switching to less risky assets from May to October, based on historical data. Seasonality in investment flows may persist as a result of year-end bonuses from the financial industry and businesses, perhaps helped by the mid-April deadline for filing U.S. income tax returns. Whatever the underlying fundamentals, the historical pattern was made more pronounced by the October stock market crashes of 1987 and 2008. Final Points 👉 The problem with historical patterns is that they do not reliably predict the future. This is especially true for well-known historical patterns. If enough people became convinced that the “Sell in May and Walk Away” pattern would persist, it would essentially begin to disappear immediately. All the early sellers would try to sell in April and bid against each other to buy back the assets before everyone else in October. 👉 At the same time, certain considerations regarding the development of geopolitical events in the period from May to October 2025 reasonably give reason to think about the prospects of such a scenario for the next 6 months. * The Halloween Indicator, 'Sell in May and Go Away': Everywhere and All the Time >> Ben Jacobsen Tilburg University - TIAS School for Business and Society; Massey University >> Cherry Yi Zhang. Nottingham University Business School China; Massey University - School of Economics and Finance. -- Best wishes, @PandorraResearch Team 😎
6:46 PM · May 11, 2025
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