Sell-in-May

The Sell- in -May effect refers to the phenomenon above-average market returns in the months of October to April. However, the temporal classification may vary slightly. When Sell- in -May effect, it is a capital market anomaly.

Related terms

In connection with the sell- in -May effect is often spoken of Halloween effect, winter effect or year-end rally. The term Halloween effect is related to the same customs as of October 31, which defines the transition between summer and winter months. The term sell- in -May effect is due to a stock market wisdom. A common continuation is: " Sell in May, but remember to come back in September. " (Sell in May, but do not forget to buy again in September. )

Evidence

An international study confirms the existence of the winter effect on the capital markets of many countries. With the exception of New Zealand, above-average returns in the winter months could be achieved in all 37 countries. Were examined (if any) capital market data from 1970 until 1988.

Criticism

A major point of criticism is the accumulation of capital market shocks (such as the ruble crisis ) in the summer period and the so-called January effect, which could improve the average performance of the winter months. In fact, the average excess return of winter fell on the U.S. stock market after correction of these effects from 1.0349 % to 0.6205 %.

Economic Importance

Despite the criticism, some work themselves, taking into account capital market shocks, the January effect and transaction costs to the profitability of an appropriate investment strategy. In a direct comparison of a sell- in -May- strategy towards a buy-and -hold strategy former showed a slightly better performance. Not least because these results offer numerous financial services investment strategies based on the effect of winter. A widespread form filters ( season ) certificates dar. This is to index certificates based on special seasonal indices. In this so-called Summer Sell in strategy, the index value of a known benchmark index (eg FTSE ) during the summer months is frozen. In the remaining months of such a seasonal index is participating fully in the performance of the Leitindexes used. In general, but especially in certificates is to ensure that transaction costs, fees and hidden costs may affect the income strong.