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Sell in May and Go Away?

Posted by Doug Hutchinson | CFA®, Director of Research and Trading

April 24, 2018

Sell in May and Go Away?

With the month of May approaching, it’s the time of year when we’re reminded of the old Wall Street saying, “sell in May and go away.” In theory, this suggests that an investor can sell out of the stock market on May 1st and get back into the market on November 1st to avoid the months where equity returns are typically depressed.

While the saying “sell in May and go away” may be catchy, is it actually sound investment advice?

Over the 50 years prior to 2016, during the 6-month period from May 1st through October 31st, U.S. stocks returned an average of 2.68%, while the 6-month period of November 1st through April 30th, U.S. stocks returned an average of 8.08%.[1]

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Investment Psychology Market Volatility behavioral finance

How Does Loss Aversion Affect Your Investment Goals?

How Does Loss Aversion Affect Your Investment Goals?

March 20, 2018
Many readers have probably heard the axiom that investors “loathe losses about twice as much as they enjoy gains.” This notion that losses loom larger than gains is a behavioral finance idea known as “loss aversion,” and it’s been around since 1979 when two economists, Kahneman Tversky, formalized the idea in a paper called Prospect Theory. To give you an idea of just how widely accepted the idea of loss aversion is, Prospect Theory is the most cited paper in all of economics and the third most cited paper in psychology. [+] Read More
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Gabriel Burczyk
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