By Dr. Carla Pasternak
There's a smarter way to play the market's summer doldrums than "sell in May and go away."
The anomaly that stock returns are greatest in November through April and fall sharply in May through October is well researched. In "The Halloween Effect in US Sectors," Jacobsen and Visaltanachoti found that over 81 years from 1926-2006, the broader market returned an average 9.67% annually.
The key point, however, is that on average fully 6.80% of that return occurred in November through April, while only 2.88% was during May through October. Equally interesting, results varied widely by sectors, and consumer sectors, such as consumer staples, performed consistently year-round.