Tags: Hulbert | stocks | October | May

Hulbert: Halloween Indicator Is Upon Us, So Get Ready to Jump Into the Market

Monday, 07 Oct 2013 09:29 AM

By Dan Weil

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The idea of buying stocks in October and selling in May has held up well over the years, meaning you might want to start loading up on stocks soon, says Mark Hulbert, editor of the Hulbert Financial Digest.

Over the past 50 years, the Standard & Poor's 500 Index has risen 6.6 percent, on average, between Oct. 31 and May 1, he writes in The Wall Street Journal. Meanwhile, the index has appreciated just 0.8 percent in the other six months of the year.

This phenomenon is known as the "Halloween Indicator" and produced the phrase "sell in May and go away."

Editor’s Note:
75% of Seniors Make This $152,000 Social Security Mistake (See Easy Fix)

To be sure, this year the S&P 500 has gained 5.8 percent since May 1. But that's not a bad omen for the Oct. 31 to May 1 period, Hulbert says.

Over the past half century, the S&P 500 has risen as much during the summer as it did this year 13 times, he says.

And in those years, the S&P 500 on average has climbed 8.6 percent between Oct. 31 and May 1. After losing summers, the average gain was only 5.3 percent.

"Those who built up a lot of cash this past May because of this seasonal pattern should therefore be looking to get back in," Hulbert writes.

Meanwhile, some investors are optimistic that the budget and debt ceiling standoff in Washington will be resolved soon, allowing stocks to move are higher.

"There's a working presumption that this is fundamentally theater, and it's going to work itself out favorably," Mackintosh Pulsifer, chief investment officer of Fiduciary Trust Co., tells Bloomberg.

"We'll find some way to raise the debt ceiling, and government workers will go back to work. In a few weeks it's not going to have any impact."

Editor’s Note: 75% of Seniors Make This $152,000 Social Security Mistake (See Easy Fix)

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