A year ago at this time, the market looked fantastic. May 10, 2006, the Dow Jones Industrial Average closed at 11,642.45, just a stone's throw breaking the all time high of 11,722.98 set in January of 2000. A bear market followed that January 2000 high, taking the index to a low of 7,286.27 in October 2002. A mere six an a half years later, we were finally approaching even.
Then one of Wall Street's oldest adages kicked in. Wall Street types love thier little sayings. "Don't try to catch a falling knife," "nobody rings a bell at the top," and, of course, "Sell in May and go away." I examined this last one in a post that I wrote last year. Go to that post for details and disclosures, but ultimately, the result was that this period from May through St. Leger's Day (the rest of the saying goes, "and don't come back until St. Leger's Day") is a significantly lackluster one.
The average return for the May through St. Leger's Day period (a little over four months) from 1969 to 2006 was 1.03% with 26 out of 38 periods returning positive results. Ultimately, like all attempts to time the market, the same risk remains. You may miss out on fantastic returns. In the long run, your portfolio could suffer significantly for it.
Hmmm, I should find out about this St. Leger Day as that's my maiden name...
Posted by: Deborah | May 10, 2007 at 05:12 PM
It's so nice to have you do all of the research for us. It makes our decision making so much easier!! Thanks.
Posted by: MBT Shoes | July 23, 2011 at 12:27 AM
nice to have you do all of the research for us. It makes our decision making so much easi
Posted by: mbt shoes clearance | October 08, 2011 at 08:54 PM