Sell In May And Go Away

Categories: Financial Theory

It's a Wall Street aphorism. Why? Well, it just seems like summers are bad for long equity investors. The bigger question? Why are markets soft in the summer? Well...ever been to The Hamptons in the summer? Watch the awesomely weird TV series, Summer House, for details.

Historically, the data would tell you that summer is not a great time to be long equities. They do tend to go down in the summer. Every summer? Not at all. But maybe 2/3 of the time. So the data doesn't help all that much, but maybe if you're on the fence about staying in your investing seat or working on your putting and short game, you opt for the latter and sober up over Labor Day Weekend.

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Finance: What are January Effect and San...3 Views

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Finance allah shmoop what are the santa claus rally and

00:05

the january effect Well we actually attended a santa claus

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rally last december the energy in the arena was off

00:13

the charts Who knew elves could be that loud Yeah

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really Ok so in finance land a santa claus rally

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is well something else it refers to a rally or

00:25

rise in stock prices during the month of december and

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they don't even need magical reindeer Teo you know achieve

00:32

lift off Why december Because according to you our desk

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calendar december is the last month of the year on

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for a whole bunch of tax and accounting reasons there

00:42

are trades that need to happen before the end of

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the calendar year like professional funds need to have a

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certain minimum amount invested in the stock market rather than

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holding cash or there was some huge hot stock that

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they want to show that they at least own for

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pa art of the year so they buy it in

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december and all investors want to sell their losers either

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for the tax loss or just because they don't want

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those on their annual report that they owned a million

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Shares of dog crap dot com so because everything is

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better with acute see name attached well this onslaught of

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activity has been termed the santa claus rally and generally

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there is more buying than selling as optimism generally beats

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pessimism this time of year So historically stocks have gone

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up right around christmas All right so what about the

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january effect Well because all the buying has bought up

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the quote loose unquote shares in the market place or

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rather the nervous nellies who kind of sort of wanted

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to sell their shares have now sold them While there

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simply isn't the supply of shares at lower prices available

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for buyers to buy and so with the same demand

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unless supply prices go up yeah eq on one first

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week and to boot Yeah there's typically an increase in

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stock prices after new year's which financial gurus have lovingly

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named the january effect Or as mrs claus calls at 00:02:05.17 --> [endTime] santa's recovery period No

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