1. What is Sell in May?
“Sell in May”, roughly translated “Sell stocks in May”, is an investment tactic of the financial-business world in the world. If this rule is followed, an investor will sell shares for cash in early May, and then start buying shares again in November. This investment strategy is backed by the notion that the stock market tends to go down during the period from May to October. In Vietnam, the "sell in May" effect is not too strong. The reason is that the stock market does not allow short selling, and at the same time imposes regulations to stabilize the trading range.
2. Where does Sell in May come from?
The proverb "Sell in May" is believed to have originated in England in the 17th century. The origin of this old adage is "Sell in May and go away, and come on back on St. Leger's Day". St. Leger's Day is the day of a famous horse racing event in the middle of September every year in England.
St Leger Stakes horse race in the UK / Source: The Forbes
The adage recommends that British investors, aristocrats and bankers leave the bustling city of London for the countryside during the hot summer months. They will enjoy the activities of the horse racing event, then return to the stock market around the end of the year. In the US, some investors have adopted a similar strategy by limiting their investments to the period between Memorial Day in May and Labor Day in September. In short, what's going on? The answer will be sent to your Email every Tuesday morning. Brainpower and Free, why not?
3. Since when is Sell in May popular?
From about the middle of the 20th century, the term "sell in May" gradually became popular. For more than half a century, this theory was evident in the US stock market. From 1950 to 2013, the Dow Jones Industrial Average showed an average return of just 0.3% in the May-October period, according to Forbes. Meanwhile, the period from November to April recorded an average increase of up to 7.5%. Based on this statistic, if an investor applies the "sell in May" strategy by only entering the market from November and then selling out his shares before the summer, he will have more profit. if only entering the market around the middle of the year. stocks The picture "sell in May" is not completely similar between the world market and Vietnam market | Source: Forbes However, this investment strategy is not always favored.
According to market research by Barron's, over the past 30 years, the "sell in May" investor has only returned 0.7% more per year than the average investor. And that profit doesn't even include taxes and transaction costs, which can result in lower profits or even losses. Commenting on the Vietnamese market, economist Dr. Vo Dinh Tri said that it is very difficult to assess the "sell in May" movement. The Vietnamese market has not had many empirical studies, while the international market has been evaluated based on decades of observational data. He gave an example that the US and Europe had observed the market for 40-50 years before making statistics and calculated the "Sell in May and go away" rule.
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