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Sell in May and Go Away

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May 01, 2008 – Comments (15)

This is probably the best year ever for that advice...

Layoffs up 68%... 

Revelon still in a loss... 

Kodak's margins squeezed by aluminum and other increased input costs...

Jobless at the highest levels since 2004... Take into consideration there is also a much higher percent of working age people just not counted...

Here's a fantasy one on the change in earnings in Canada going back to 1980.  I could fill my gas tank for an hour's wages in 1980.  I have two degrees now and it take almost 2 hours of work to fill my tank now, and I am in the highest paying region in Canada.  

Seriously, in the early 80s I remember a couple one bedroom apartments I looked at which were under $30k.  One of them is now about $300k.  I'd have to make double what I'm making now to keep up with my entry level high school buying power job.  They are so full of $hit.

15 Comments – Post Your Own

#1) On May 01, 2008 at 9:40 AM, dwot (97.03) wrote:

Caps lost this post as well, but I copied before hitting the post button.

What ever they did sure is frustrating. 

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#2) On May 01, 2008 at 9:49 AM, dwot (97.03) wrote:

Home Depot to close 15 stores.

http://www.reuters.com/article/businessNews/idUSWNAS124220080501 

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#3) On May 01, 2008 at 9:57 AM, dwot (97.03) wrote:


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#4) On May 01, 2008 at 10:08 AM, LordZ wrote:

You can still make money even if the sky is falling.

Yes I heard about this strategy to not be invested in the market during the summer, but where than would one put their money ??? A big breasted blonde ??? I think not.

Remember when stocks fall thats the best time to buy them, not when their price are high. You don't go into stores and buy when they announce they have raised prices, yet with stocks it seems most chicken people do this they sell when the stocks are cheap and buy them when they are too high.

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#5) On May 01, 2008 at 10:08 AM, FoolishChemist (97.01) wrote:

It's just 10 hours into the month of May and you already have 6 blog posts?!  At this rate you'll have about 450 by the end of the month.

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#6) On May 01, 2008 at 11:24 AM, GS751 (27.55) wrote:

haha I think dwot is the most diligant blogger on caps, blogging can be addicting though.

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#7) On May 01, 2008 at 12:23 PM, FleaBagger (29.37) wrote:

Chemist -

She posted 5 in the first hour of May in something related to a snafu with the CAPS server, though I don't know exactly what happened.

dwot -

If you sell in May and walk away this year, inflation could be a killer of the value of your cash. I'm a big fan of silver, especially after this recent, uncalled-for pullback.

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#8) On May 01, 2008 at 12:34 PM, Hezakiah (93.67) wrote:

I wonder what the long term results of this strategy have been... or is it just some interesting but useless saying.

 I saw this strategy involving the 200 day moving average that backtests quite well:  

http://randomroger.blogspot.com/2008/04/theory-time.html

 

According to this method, one would have gotten out of the market in October and would still be out. 

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#9) On May 01, 2008 at 3:39 PM, abitare (58.10) wrote:

Sell in May and RUN AWAY! Yes, you should...

Chart of the Day can show you why to walk away!

http://www.chartoftheday.com/20080425.htm?T 



 

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#10) On May 01, 2008 at 5:21 PM, Hezakiah (93.67) wrote:

abitarecatania -

The above chart shows that "Sell in May" would actually be an ineffective strategy.  Doing so over that time period would have reduced your total portfolio size by about 50%.  The strategy only works if you can either find a time in which the market goes nominally down, or if you can switch to an alternative investment allocation that outperforms this sluggish period of the market.  Maybe commodities, currencies, or fixed income products used during May-Oct would indeed boost the blue line above the gray line, but until that is shown, the strategy is not productive.

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#11) On May 01, 2008 at 6:22 PM, abitare (58.10) wrote:

Hezakiah,

Most money is made Nov-Apr. The risk vs return makes May-Oct not worth it.

Besides an:

extremely risky,expensive occupation in Iraq, unemployment rapidly rising, housing implosion, record foreclosures, retail bankruptcies, airline bankruptcies, autmobile lay offs,  homebuilder lay offs, paniced  FED, credit  crunch, collapsing dollar, record oil, commodity inflation, food riots, interest rates are rising all over the globe, Alt A implosion, recession growing to depression, a idiotic consumption based economy... DO YOU WANT MORE REASONS?

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#12) On May 01, 2008 at 6:31 PM, dwot (97.03) wrote:

FoolishChemist, 4 of them were testing to see if I could post because CAPS ate the posts I'd written.  Testing worked and what did CAPS do, it ate my post again.

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#13) On May 01, 2008 at 7:42 PM, Hezakiah (93.67) wrote:

I see that most money is made in Nov-Apr...  If all you are looking for is risk aversion, then this is great.  Whether or not investing in the summer months is "worth it" depends on your time horizon and how much risk you can stomach.  The risk in this sense is only in terms of return vs. volatility since I see no fundamental reason why major market crashes would be more likely to occur in the summer.

As far as all the other reasons you listed, I agree with you.  I am also bearish on the markets right now.  But they do not relate at all to the "sell in May" strategy... no more than they do to the "sell now" stance.  It just happens that in this case now = May.

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#14) On May 01, 2008 at 9:27 PM, RVAspeculator (31.13) wrote:

Amen brother...  im short and feel like I am fighting the tape.  At least I just got on the short bus fairly recently.

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#15) On May 01, 2008 at 10:30 PM, dwot (97.03) wrote:

Hezakiah, interesting...  I did get out in October/November.  I had a very small holding at the beginning of November.  Of course my selling was simply related to thinking it through and deciding the risk just wasn't worth it.

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