Interesting article in this week’s Barron’s (Should You Sell in May and Go Away?) from Sam Stovall. The entire article can be summed up in this quote:
Instead of selling in May, investors would have been better off embracing a semiannual rotation strategy. I found that from 1995-2011 (the period common to the S&P 500, S&P Equal Weight 500 and the S&P SmallCap 600), had an investor owned the overall benchmark from November-April, and then a 50% exposure to each of the Consumer Staples and Health Care sectors from May-October, their returns would have bested their relevant benchmarks by as much as 510 basis points per year.
I’m not sure about this idea. I’m not big on market timing. I’m also skeptical of the trading costs involved in such a strategy. I’m also skeptical of of his data range of 1995 – 2011 as it doesn’t seem broad enough to detect any long-term trends.
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