Sell in May, and go away? • Hacker News Board

Re: Sell in May, and go away?

#31

Post by brc » Fri, Apr 10, 2015, 5:07 AM UTC

fonosip wrote: post #27

dustcoin wrote: post #2

This analysis is only looking at the price of the S&P 500, not the total return. An investor that sits out half of the year will miss out on about half of the dividends paid, which are always positive. EDIT: Here is a graph highlighting how important including dividends is: https://i.imgur.com/YZSq6K3.png Another consideration is taxes. The short-term gains produced by selling after 6 months are taxed at normal incom…

The taxes issue could be solved in a fund that implements the strategy. There is another advantage: during 6 months of the year you have 0 risk.

0 equity risk. You're still running currency risk with whatever currency you're holding in.

Re: Sell in May, and go away?

#32

Post by codebolt » Fri, Apr 10, 2015, 6:47 AM UTC

dustcoin wrote: post #2

This analysis is only looking at the price of the S&P 500, not the total return. An investor that sits out half of the year will miss out on about half of the dividends paid, which are always positive. EDIT: Here is a graph highlighting how important including dividends is: https://i.imgur.com/YZSq6K3.png Another consideration is taxes. The short-term gains produced by selling after 6 months are taxed at normal incom…

But that difference is diminished when you also take into account that you would be earning interest on your capital in the period you were out of the markets (e.g. through a savings account or short-term bonds).

Re: Sell in May, and go away?

#33

Post by dustcoin » Fri, Apr 10, 2015, 7:57 AM UTC

codebolt wrote: post #32

dustcoin wrote: post #2

This analysis is only looking at the price of the S&P 500, not the total return. An investor that sits out half of the year will miss out on about half of the dividends paid, which are always positive. EDIT: Here is a graph highlighting how important including dividends is: https://i.imgur.com/YZSq6K3.png Another consideration is taxes. The short-term gains produced by selling after 6 months are taxed at normal incom…

But that difference is diminished when you also take into account that you would be earning interest on your capital in the period you were out of the markets (e.g. through a savings account or short-term bonds).

They are already factoring that in, using a 5% risk-free rate.

Re: Sell in May, and go away?

#34

Post by jklein11 » Fri, Apr 10, 2015, 2:05 PM UTC

zaroth wrote: post #18

I moved a large portion of my IRA to cash towards the end of last year, there were just too many red flags and unknowns, and seemingly unexplainable reactions to the daily news cycle, and the market had performed just so well over the last several years, it seemed like a peak would have to be near. Of course, what actually happened is I managed to miss a 15% bump in IJT, a 5% bump in VT, a 6% bump in IYY, and about f…

Sounds like you aren't listening to your own advice about timing the market. Just put the money back in and know that 20 years from now it will(more likely than not) be worth more than it is today.

Re: Sell in May, and go away?

#35

Post by jklein11 » Fri, Apr 10, 2015, 2:07 PM UTC

Uroboric wrote: post #22

I sold in early March. To me it seems like more of a gamble to be in than out at this point.

Can you elaborate on why you think its more of gamble to be in than out?

Re: Sell in May, and go away?

#36

Post by jklein11 » Fri, Apr 10, 2015, 2:09 PM UTC

stevewilhelm wrote: post #23

Uroboric wrote: post #22

I sold in early March. To me it seems like more of a gamble to be in than out at this point.

Depends on your time horizon.

Not really... It depends on the basis of his intuition. If you knew some details about the market that others did not it would make sense to act on that information regardless of if you needed the money tomorrow or forty years from now.