Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Bio
X •  LinkedIn
 

  Sell in May and Go Away! Why?
Posted Under: Conceptual Investing
Supporting Image for Blog Post

 
View from the Observation Deck  
  1. The old axiom in the stock market about selling your stocks at the close of April and then buying back in at the start of November once made some sense from a seasonality standpoint.
  2. When the U.S. was more of an industrialized economy it was not uncommon for plants and factories to close for a month or longer in the summer to retool and allow employees to vacation.
  3. The theory was that companies would conduct less commerce in that six-month span, which would translate into lower earnings.
  4. Today, due in large part to globalization, the world is far more interconnected and competitive, and there is less room for downtime, in our opinion.
  5. The three most glaring May-October (2001, 2002 & 2008) periods featured in the chart occurred while in the midst of the last two bear markets. Aside from those three, there hasn't been much downside for investors.
  6. The average return for the November through April periods in the chart was 8.14%, compared to a 2.49% return for the May through October periods. These returns, when added together, are in line with the historical norm.
  7. From 1926 through 2014, the average annual total return posted by the S&P 500 was 10.12%, according to Ibbotson Associates/Morningstar.
This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. Past performance is no guarantee of future results. The S&P 500 is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance.

To Download a PDF of this post, please click here.
Posted on Tuesday, April 28, 2015 @ 3:11 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email
 


 PREVIOUS POSTS
4 Factors Effecting Valuations Today
A Potential Remedy For A Nagging Problem That Could Get Worse
S&P 500 Top-Line Growth Estimates
A Snapshot of Growth vs. Value Investing
Beat Rate Still Above 80%
Some Government Bonds Yield Less Than Half Of What They Did In 2010
Will an 83% Beat Rate Continue?
Will 2015 Be The Year The Fed Tightens?
U.S. Oil & Gas Rig Counts Plunge With Energy Prices
Comments on Interest Rates on the Cusp of Earnings Season
Archive
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.