Dow normally dips during the summer?

Yes. May-October is historically weak. Hence the old saying, sell in May and go away.

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Yes. May-October is historically weak. Hence the old saying, sell in May and go away.

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"OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks. The other are July, January, September, April, November, May, March, June, December, August, and February."

Mark Twain

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"OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks. The other are July, January, September, April, November, May, March, June, December, August, and February."

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ISWHDT

What are the numbers if you don't get back in for October, but wait for November like I originally posted? Split the year November 1- April 30 vs. may 1- October 30?

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Vols&Shaft83

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Yeah, you are probably right.

photo removed

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You plan on selling the funds in September? Probably shouldn't invest in mutual funds then. If not, then pay no mind to the "sell in May, then Go away" philosophy, because Timing the market is STUPID, but Time IN the market is the key to long term returns.

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Understand that, however most things I am seeing now are at historical highs. I keep picturing some type of correction in the near future based on that and past performance.

I know you can't really time the market, but based on what I am seeing I can envision getting into some of these funds right now and then riding them down during the early summer.

ETA: I'm in the market now, just thinking about making some moves.

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Yeah, you are probably right.

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Does that chart account for costs associated with moving in and out of equities and converting to cash/bonds?

Investors selling in May incur taxes on short-term capital gains and higher transaction costs than investors who simply buy-and-hold.

I'm sure that there is a seasonal component to stocks' price appreciation that is inconsistent with efficient markets, but these data aren't enough to judge the efficacy of a seasonal switching strategy.

Long story short, buy and hold is more efficient, less risky, and less work.

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Here is my strategy. Build a good core portfolio with some balanced funds and a few other holdings that you keep pretty much year round. During the Nov.-April time I add equity ETFs to create that little extra alpha. It is not always perfectly on those dates, but market momentum will tell you. For example, this year past year it didn't really happen until December. I set trailing stops behind them around April and protect my gains. Sometimes I miss a little return, but I rarely take the big hit one must avoid.

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So essentially we have almost identical strategies, setting a trailing stop does not necessarily mean "Selling in May". You're still holding, with insurance on your profits if the stock takes a "big hit". So why are we arguing?

The idea of seasonal trends is very similar to the idea of other market anomalies (i.e. January Effect).

There is a fundamental flaw with consistently repetitive patters and this is why market timing is a near impossibility:

If there is any real correlation to these so-called patterns then by the time the market has "realized" these effects, then it becomes a part of the efficiency and rational investors eventually dilute any correlation.

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Janky

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Although your chart does supports January returns pretty well. I would like to see a 10/20/30 year monthly returns.

Bump

Anyone have anymore thorough historical evidence supporting/denying the correlation of "seasonal trends".

I lean towards saying there isn't a sigificant correlation, but I've been wrong and foolish before.