For the past few days i have been analyzing the appropriate applicability of the adage "Sell in May and Go Away" in order to form right strategies to manage my portfolio.
I analyzed the returns of Kuwait Stock Exchange, but dint find any applicability (of the "saying") as the average returns generated between May and October, though less compared to November and April, have been positive in the past 10 years (see table below). So might as well, one can remain invested during the month of May!!
Further I explored the returns of Bombay Stock Exchange for the same period. This time the axiom fits perfectly.
My analysis show that an investor who invested his capital between May and October would have lost compared to gains made between the period of November to April - in the past 10 years.
A close observation of the returns show that, (please refer to the chart which pertains to table showing the returns only in the month of May), in the past 10 years the index had formed a pattern jigging between gains and losses one after another.
Starting with Year 2000, the month of May ended negatively; the following year i.e. 2001 witnessed gains and so forth.
So what does this pattern indicate?? Does this mean that in the current year the month of May will close in the negative territory - as the previous year has closed positively???
Anyhow, i have formed my strategies to protect my capital and hope that my analysis will help you, too.
Happy Investing !!!
I analyzed the returns of Kuwait Stock Exchange, but dint find any applicability (of the "saying") as the average returns generated between May and October, though less compared to November and April, have been positive in the past 10 years (see table below). So might as well, one can remain invested during the month of May!!
Further I explored the returns of Bombay Stock Exchange for the same period. This time the axiom fits perfectly.
My analysis show that an investor who invested his capital between May and October would have lost compared to gains made between the period of November to April - in the past 10 years.
A close observation of the returns show that, (please refer to the chart which pertains to table showing the returns only in the month of May), in the past 10 years the index had formed a pattern jigging between gains and losses one after another.
Starting with Year 2000, the month of May ended negatively; the following year i.e. 2001 witnessed gains and so forth.
So what does this pattern indicate?? Does this mean that in the current year the month of May will close in the negative territory - as the previous year has closed positively???
Anyhow, i have formed my strategies to protect my capital and hope that my analysis will help you, too.
Happy Investing !!!
it is all rubbish , market is simply moving above 7 yrs exponenetial moving average if remains to be bullish or positive , u can buy any share if it is above this moving avearge . Very simple formula is that sell when monthly MACD is going to move down and buy when this MACD is moving up
ReplyDeleteMr. Agarwal,
ReplyDeleteI appreciate your comments and agree to your technical funda. But, please also note that one need to analyze fundamentally. One needs to put in place a lot of factors before giving a green or red signal. And in my post I have not mentioned, anywhere, whether one should buy or sell. I have just posted my historical analysis. Those who feel that this study is useful can take it, the rest can discard.
And with regards to your MACD, where was your technical move, yesterday?? Say for the S&P 500. The indicator was pointing down (analyzing 1 yr period) yet the market went ga-ga, rising by 3.90%. This move was fundamental.
Any ways thank for enlightening me.