Bottom Line: Behind Market Clichés
The biggest cliché, “buy low and sell high" is incontrovertibly true by its very nature— the rest of these chestnuts bruise a little more easily. Decide for yourself:
1) Sell in May and Go Away
The jingly wisdom actually has quite a track record of panning out. Historically the market's biggest upside actions have taken place Oct-April. One study from Aegon Asset Management found the summer adage held true for 36 of the 37 markets they studied from 1970-1998 with New Zealand proving the outlier with summer returns averaging 2.3% while winter returns averaged 9.9%. Still as any statistician worth their salt will tell yah, to use this old chestnut as an investment strategy is a foolish errand since from 2009-2020 the exact opposite could happen just as likely.
2) Pigs Get Slaughtered
Often lengthened to “Bulls make money, bears make money, pigs get slaughtered." Pretty easy to digest, but basically, get too greedy and you will lose your shirt. If you’ve made a lot on a move, be satisfied and take your profits before they evaporate.
3) Don't Catch a Falling Knife
Don’t mess with momentum. If a stock is falling day after day, don’t think it has hit the bottom just because it appears to be attractively priced after a multi-session sell-off.
4) Don’t Fight the Tape
A kissing cousin of “don’t catch a falling knife," it espouses the same sage yet simplex wisdom t...
|
|
|
