(WJAR) — Did you know the day after Halloween is also a good time to invest in the stock market?
It’s called “The Halloween Effect.”
Certified Financial Planner Jeff Massey of Massey & Associatessaid the theory is to invest now, because stocks typically perform slightly better from Nov. 1 through May 1.
“There’s an old concept: Sell in May and go away,” said Massey. “And when you look at the analytics, the market from October to May tends to be pretty good, but yet, historically, from May into October, it’s less productive.
Massey said, this year, the adage holds true.
“If we look at a very short window – November last year to the end of April this year, the market, the S&P 500 is up 26% – that’s huge,” said Massey. “Well, from the end of April to current, it’s up 10%.”
Why does the market seemingly do better those six month following Halloween?
Massey said one theory is traders take more vacation time during the summer months, so investments don’t perform as well; however, that answer is purely speculative.
At the end of the day, Massey says the best way to make money is to stay invested in the market for a long time – not six months.
“It’s not about timing the market, it’s about your time invested in the market that makes a difference in the long run,” said Massey. “And when you look at investing in the market, it should always be a long run look.”
He said markets are not good for short term money.
“If you need to buy a house in two years, you should not put that money in the market because although it’s been great, it could flip in a minute,” cautioned Massey.
If you’re curious how next week’s presidential election could potentially impact the stock market, Massey said historically, elections don’t have a major impact on long-term returns.
However, he said if the first half of an election year yields double digit returns – which we saw this year – it’s likely we’ll see double digit returns in the second half of an election year.
But again, none of this is an exact science… Only time will tell.
