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:
2017: -2,5%
2016: 5,9%
2015: -12,1%
2014: 6,6%
2013: 2,7%
2012: -3,1%
2011: -8,9%
2010: -1,6%
2009: 12,6%
2008: -2,1%
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".
Great research. The numbers are even more meaningful when you consider we've had some very strong overall returns in the stock market in the last few years. Still not strong enough to turn most of us into market timers.
RépondreSupprimerThe market is too manipulated in the short term. I rather buy companies I believe will become 5x, 10x, 100x my money over a long term period and use the bullshit to my advantage and buy on dips.
RépondreSupprimerAgree with Twotime. For instance, i am right now buying large positions in oil (Cenovus) and Nutien (ag). I think anyone selling these two sectors for seasonality is unwise.
RépondreSupprimerWhat did CSU and DOL do over the past 8 years from May 1 to Sept 1? We don't own the market so who cares. Now, if you can prove to me that our high ROE ponies sucked during those months then maybe we have something to discuss.
RépondreSupprimerSorry; past 10 years I meant... you get the idea I'm sure.
RépondreSupprimerI think the most likely ten bagger from Vicario's recommendations is a little company called Sangoma Technologies. It's a very small company that keeps buying other companies AND growing organically at the same time.
RépondreSupprimerIt must mess with the heads of many investors to think over the last 10 years very few companies have done as well as names like Netflix, Amazon and Tesla. Is Netflix really worth $145 billion? I think Penetrator's friend Robin Speziale listed it as a "misunderstood" stock. What am I misunderstanding?
Why would Sangoma Technologies be a potential 10 bagger? Just wondering. THX
RépondreSupprimerSangoma Technologies (STC.v) has a next year p/e of around 10, they have doubled their revenue in the last three years or so, and they keep making acquisitions as well as growing organically. They have something like 5 acquisitions in the last five years and just raised over $10 million in order to keep acquiring other companies. At some point, very rapid growth in revenue and earnings combined with a very low p/e will probably result in a lot higher stock price. No guarantees. Everybody should do their due diligence.
SupprimerI will delve a little deeper. Thanks for the info.
RépondreSupprimer