Enviado: 2/5/2005 15:36Sobre o tema um artigo do Realmoney:
Sell in May (but Don't Go Away), Part 1
By Barry Ritholtz
Special to RealMoney.com
5/6/2004 4:15 PM EDT
"I keep hearing people talk about "seasonal factors," as if those were the only influence on the markets. Although they can be influential, they are often trumped by other, more immediate issues. That appears to be the case this year as well, but understanding seasonality can still help improve your trading.
Two time frames make up the traditional definition of seasonality. First, there's the Halloween Trade, which involves getting long from Halloween through May Day. Since 1950, the vast majority of market gains took place in the six-month period from November through April, according to data compiled by the Stock Trader's Almanac. The rest of the calendar year was essentially flat.
The other part of the trade -- "Sell in May, and then go away" -- dictates avoiding U.S. equities from the beginning of May through the end of October. Last spring, I was on the record in The Wall Street Journal saying that 2003 would be a bad year to follow that dictate. At that time, the uncertainty surrounding the start of the Iraq war was behind us, and the stimulus of a massive tax cut was ahead, so it seemed imprudent to be out of equities. That turned out to be the right bet in late spring 2003.
This year, there's not nearly the same level of stimulus or sentiment factors supporting stocks. Yet, several cyclical reasons still indicate that the sell-in-May strategy might not be the best course of action in 2004.
Understanding Seasonality
On average, the Halloween portion of the trade does outperform the overall market for several reasons. First, consumers are especially active that part of the year, thanks to back-to-school spending and the holiday shopping season. Year-end tax planning and contributions to retirement accounts also raise inflows into mutual funds. January sees holiday bonuses spent, invested or both. Pension funds also deploy much of their capital in January when they rebalance portfolios.
Seasonal Affective Disorder notwithstanding, New Year's also tends to be a hopeful time, and that sentiment often finds its way into the markets. Plus, taxpayers who are expecting a substantial refund tend to file early. That refund money finds its way into the broader economy as well as the markets in the first and second quarters. Last, prior-year IRA contributions can still be made as late as Tax Day.
That's when the sell-in-May rationale enters the picture. Once tax refund season comes and goes, there's little in the way of positive catalysts. Over the summer, many Wall Streeters are in the Hamptons or on the Jersey Shore. Volume drops off precipitously, all but disappearing on August Fridays.
In October, mutual funds close out their fiscal year. Cleaning up their positions after the summer can cause dislocations in the market, as profits get locked down and losing positions are jettisoned. It's no coincidence that the 60 days leading up to fiscal year-end are so crash prone.
Jeff and Yale Hirsch of the Stock Trader's Almanac have noted that September is the worst month of the calendar year. October has also had more than its fair share of crashes. Indeed, the history of markets putting in ugly lows during these two months is partly why the seasonality trade has enjoyed such success. Buying into post-Labor Day weakness at advantageous prices explains a hefty part of this strategy's advantage.
Other Factors in Play This Year
Before I decide to take the summer off, though, I look at the previous trend strength and market internals. Ideally, selling in May happens after a rally from November to April. We didn't exactly have that this year, as the markets put in a short-term peak Jan. 26. We've been range-bound to lower since then, so the selloff may climax, rather than begin, sometime after May 1.
While I have somewhat less conviction this year than I did last because of the aforementioned stimulus and sentiment factors, several reasons still hint that selling in May (and staying out of equities for six months) may not be the strategy this year. In the next part of this column, to be published Friday, I'll explain what they are. "
(in www.realmoney.com)
Sell in May (but Don't Go Away), Part 1
By Barry Ritholtz
Special to RealMoney.com
5/6/2004 4:15 PM EDT
"I keep hearing people talk about "seasonal factors," as if those were the only influence on the markets. Although they can be influential, they are often trumped by other, more immediate issues. That appears to be the case this year as well, but understanding seasonality can still help improve your trading.
Two time frames make up the traditional definition of seasonality. First, there's the Halloween Trade, which involves getting long from Halloween through May Day. Since 1950, the vast majority of market gains took place in the six-month period from November through April, according to data compiled by the Stock Trader's Almanac. The rest of the calendar year was essentially flat.
The other part of the trade -- "Sell in May, and then go away" -- dictates avoiding U.S. equities from the beginning of May through the end of October. Last spring, I was on the record in The Wall Street Journal saying that 2003 would be a bad year to follow that dictate. At that time, the uncertainty surrounding the start of the Iraq war was behind us, and the stimulus of a massive tax cut was ahead, so it seemed imprudent to be out of equities. That turned out to be the right bet in late spring 2003.
This year, there's not nearly the same level of stimulus or sentiment factors supporting stocks. Yet, several cyclical reasons still indicate that the sell-in-May strategy might not be the best course of action in 2004.
Understanding Seasonality
On average, the Halloween portion of the trade does outperform the overall market for several reasons. First, consumers are especially active that part of the year, thanks to back-to-school spending and the holiday shopping season. Year-end tax planning and contributions to retirement accounts also raise inflows into mutual funds. January sees holiday bonuses spent, invested or both. Pension funds also deploy much of their capital in January when they rebalance portfolios.
Seasonal Affective Disorder notwithstanding, New Year's also tends to be a hopeful time, and that sentiment often finds its way into the markets. Plus, taxpayers who are expecting a substantial refund tend to file early. That refund money finds its way into the broader economy as well as the markets in the first and second quarters. Last, prior-year IRA contributions can still be made as late as Tax Day.
That's when the sell-in-May rationale enters the picture. Once tax refund season comes and goes, there's little in the way of positive catalysts. Over the summer, many Wall Streeters are in the Hamptons or on the Jersey Shore. Volume drops off precipitously, all but disappearing on August Fridays.
In October, mutual funds close out their fiscal year. Cleaning up their positions after the summer can cause dislocations in the market, as profits get locked down and losing positions are jettisoned. It's no coincidence that the 60 days leading up to fiscal year-end are so crash prone.
Jeff and Yale Hirsch of the Stock Trader's Almanac have noted that September is the worst month of the calendar year. October has also had more than its fair share of crashes. Indeed, the history of markets putting in ugly lows during these two months is partly why the seasonality trade has enjoyed such success. Buying into post-Labor Day weakness at advantageous prices explains a hefty part of this strategy's advantage.
Other Factors in Play This Year
Before I decide to take the summer off, though, I look at the previous trend strength and market internals. Ideally, selling in May happens after a rally from November to April. We didn't exactly have that this year, as the markets put in a short-term peak Jan. 26. We've been range-bound to lower since then, so the selloff may climax, rather than begin, sometime after May 1.
While I have somewhat less conviction this year than I did last because of the aforementioned stimulus and sentiment factors, several reasons still hint that selling in May (and staying out of equities for six months) may not be the strategy this year. In the next part of this column, to be published Friday, I'll explain what they are. "
(in www.realmoney.com)
