The Halloween Effect

by 31 Oct, 2018


Pumpkins, ghouls, werewolves and vampires aren’t the only spooky things creeping around your neighbourhood at this time of year. The stock market also takes on a scary change in behaviour as an age old tradition comes out of the shadows.

It’s known as the Halloween effect, and it is backed by almost 70 years of evidence. The age-old saying “sell in May and go away” brings forth the spectre of a change in trading behaviour that still exists to this day.

The change in behaviour was first noticed in the 1950’s at a time of year when the wealthy would leave London and New York to seek out their luxurious holiday homes. To avoid the stress of monitoring their investment portfolios while they were having a relaxing holiday, they would sell off their positions in “May and go away” triggering the start of a sell-off cycle that would last from the start of summer to its end in October. Their return to the city in October would end the cycle with an aggressive buying spree – but will it be the case this year?

Whilst many modern portfolio managers still look to lighten their portfolios before their extravagant Hamptons and European holidays, and buy on their return, this year may have a dramatically dampened effect.

With the global equity market sell-off putting heavy pressure on global markets, even the scariest of trading effects may not be able to bring about the buying stability that the market is so lusting after at the moment.

Having erased many of the gains made in the early part of 2018, the markets now teeter on the edge of “correction” status as stocks near the 10% loss mark – a very scary prospect. Perhaps Count Dracula can use some of his inheritance money to kick start the buying spree on wednesday. We live in hope, mwahahaha!

Want to learn more about the markets and how to become a better investor?

Download the Invstr App now.

All emails include an unsubscribe link. You can opt-out at any time. ​See our privacy policy.

All emails include an unsubscribe link. You can opt-out at any time. ​See our privacy policy.

Download on the App Store           Download on Google Play


Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.


Get the app
Share This