Illustration: John Holcroft for The Wall Street JournalThe stock market’s famous six-months-on, six-months-off pattern—known alternately as “Sell In May and Go Away” or the Halloween Indicator—is more than a superstition. During such years over the past 12 decades, there was an 11-percentage-point difference between the stock market’s average winter and summer. The researchers became even more confident in their conclusions after searching for the Halloween Indicator in the stock markets of several foreign countries: Canada, France, Germany, Italy, Japan, Britain, Australia and Singapore. Photo: iStockphoto/Getty ImagesWhat might cause the stock market to perform so much better in the winters of presidential third years than in the summers of those years? Drawing on standard principles from Finance 101, they reason that the stock market may well be providing a higher return during those times to compensate investors for the greater uncertainty.

Source: Wall Street Journal February 06, 2017 03:09 UTC