Gyroscopic Investing

I've been reading Best Laid Investment Plans, where HB devotes quite a bit of text to detailing various superstitions among investment managers.  I was thinking that it couldn't be THAT common, until I read this:

NEW YORK (CNNMoney) -- U.S. stocks finished in the red Thursday, ending a wretched month on a weak note.
"May is always a difficult month for the market, and this month has lived up to that reputation," said Fred Dickson, chief market strategist at D.A. Davidson, noting that the market has suffered declines in May for three out of the last four years.

Oh so that's the problem!  And here I thought it had something to do with Spain, Greece, underwater homeowners, massive credit card and government debt, and so on.  Silly of me  :D

Just for fun, the preceding 4 years saw the following changes in the S&P 500 index during the month of May:

2008:  -0.6%
2007:  +0.2%
2006:  +6.8%
2005:  +4.0%

WiseOne wrote: Just for fun, the preceding 4 years saw the following changes in the S&P 500 index during the month of May:

I think we must have been posting something about the month of May thing at almost the same exact time so it is now confirmed in an almost supernatural way that great minds think alike (assuming your mind is as great as mine, of course).

My post above yours talks about the Drudge Headline from CNBC reporting that the stock market has had its worst May since 2010. That's right, believe it or not - there hasn't been a worse May on record going all the way back to 2010!

WiseOne wrote: 2008:  -0.6%
2007:  +0.2%
2006:  +6.8%
2005:  +4.0%

Generally, markets take a nose dive after or around the Spring & Autumn Equinoxes.  Closing monthly prices don't necessary illustrate what could be tremendous intramonth volatility.

But exploiting seasonal effects such as the above requires much more diligence than the superficiality of "3 of the last 4 years".  And the noise in the signal may overwhelm the returns.