“Sell in May and go away” adage or also widely know as Halloween indicator, is the belief that the period from November to April has significantly stronger growth on average than the other months.
In such strategies, stocks are sold at the start of May and the proceeds held in bonds or a deposit account. Stocks are bought again in November, typically around Halloween.
How true is this to our stock market? The table below shows the historical data since 1988.
| Year | Change in FBM KLCI (%) | Change in Dow Jones (%) | ||||
|---|---|---|---|---|---|---|
| May to Oct | Nov to Apr | May Effect | May to Oct | Nov to Apr | May Effect | |
| 1988/89 | 10.7 | 27.5 | √ | 5.7 | 12.6 | √ |
| 1989/90 | 7.7 | 9.5 | √ | 9.4 | 0.4 | X |
| 1990/91 | -5.5 | 19.7 | √ | -8.1 | 18.2 | √ |
| 1991/92 | -9.7 | 11.3 | √ | 6.3 | 9.4 | √ |
| 1992/93 | 8.4 | 12.2 | √ | -4 | 6.2 | √ |
| 1993/94 | 35.1 | 8.5 | X | 7.4 | 0 | X |
| 1994/95 | 5.2 | -14.2 | X | 6.2 | 10.6 | √ |
| 1995/96 | 0.6 | 24.2 | √ | 10 | 17.1 | √ |
| 1996/97 | -1.8 | -7.5 | X | 8.3 | 16.2 | √ |
| 1997/98 | -38.5 | -5.8 | √ | 6.2 | 21.8 | √ |
| 1998/99 | -35.2 | 66.5 | √ | -5.2 | 25.6 | √ |
| 1999/00 | 10.1 | 20.9 | √ | -0.5 | 0 | √ |
| 2000/01 | -16.3 | -22.3 | X | 2.2 | -2.2 | X |
| 2001/02 | 2.7 | 32.3 | √ | -15.5 | 9.6 | √ |
| 2002/03 | -16.9 | -4.4 | √ | -15.6 | 1 | √ |
| 2003/04 | 29.6 | 2.6 | X | 15.6 | 4.3 | X |
| 2004/05 | 2.7 | 2.1 | X | -1.9 | 1.6 | √ |
| 2005/06 | 3.6 | 4.2 | √ | 2.4 | 8.9 | √ |
| 2006/07 | 4.1 | 33.8 | √ | 6.3 | 8.1 | √ |
| 2007/08 | 6.9 | -9.5 | X | 6.6 | -8 | X |
| 2008/09 | -32.5 | 14.7 | √ | -27.3 | -12.4 | √ |
| 2009/10 | 25.5 | 7.5 | X | 18.9 | 14.6 | X |
| Total | 14 of 22 | 16 of 22 | ||||
From historical data, we can see that it does has impact. What do you think about this year?
Holders sell, buyers buy, magic formula of success in tradings.
Drop. The index up too much already since last year. It’s time for correction. 😉
Wow, got such thing? Thanks for the information…