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Though this effect is often cited informally, it has largely been ignored in academic circles (perhaps being assumed to be a mere superstition). Nonetheless analysis shows that the effect has indeed occurred in almost all countries examined, and since the 17th century in the UK; it is strongest in Europe. Even after taking into account dividends and trading costs, the 'sell in May' strategy works significantly better than the ' Buy And Hold ' strategy of holding stocks all year round.

It is not clear what causes the effect, though it is often thought to be related to summer vacations.


REFERENCES

Jacobsen, Ben and Bouman, Sven: "The Halloween Indicator, 'Sell in May and Go Away': Another Puzzle" (July 2001). {Link without Title}