One of the catchier market slogans that pops up every spring is “sell in May and go away,” a rule of thumb that says if you take your profits in the spring and stay away from stocks for the summer, you’ll come out ahead for the year.
It’s one of those catch-alls that can’t be applied blindly, but unlike other market saws, this one may have something to it. This May, the TSX fell 6.6 per cent, posting its worst month of the year. It had regained a portion of that loss, rising 1.8 per cent since June 1, but the TSX is still down slightly on the year.
The U.S. version is known as the Halloween Indicator, which splits the year into two six-month periods, May 1 through to October 31, and November 1 through to April 30. So if you followed this approach and sold all your stocks on May 1, you would then buy them all back on October 31.