You probably know that sentence: "Sell in may and go away". How do you feel about it? My father said to me a couple of times that he thought that it was true.
Once again, Penetrator is there to help humanity to see through myths and go one step further.
First of all, you'll admit that, as an investor or a businessman, only stupid people would sell everything they own in may, hoping to buy everything back a few months later for a lower price.
But things are not always that drastic. What about having some money left and waiting for the right moment to invest during the year? In that regard, waiting for a specific period where stocks are cheaper wouldn't be stupid. It would be wise.
So, here's how the S&P500/TSX composite performed from may 1st to september 1st (approximately because these days aren't always open days for the market). The numbers are from 2017 back to 2008:
Average return: -0,3%
It's not that bad. Well, it's not good either, but not bad enough to justify to sell everything. And probably not good enough to wait for that period to invest your money. That study reveals that, as some great investors said before, "Don't be a cunt. Don't try to do some market timing".
You now can have an opinion about "Sell in may and go away".