Halloween Strategy: Trick or Treat?


With Halloween just around the corner and this being the time of the year when the dead crawl out of their graves to haunt us, is it possible for the financial markets to get any worse?


Halloween dates back over a thousand years and was originally a religious observance where people dressed up in costumes and lit fires to ward off the souls of the dead.


This year seems very relevant to Halloween, and will we see zombie stocks and funds dragging themselves off their death beds to make an amazing recovery?


Halloween has been associated with the financial markets for a long time and is based on the ‘Halloween Strategy’ of buying stocks in November and selling in May the following year. There have been various studies being carried out to check on the success of this strategy with probably mixed results.


In many years, this would have worked and often the reason given was that people tended to go away in the summer and as a result the markets did not really go anywhere. This strategy is now likely to be less successful as we have electronic trading, and the trading volumes no longer decline in the summer.


What we can say is that 2022 has been a terrible year for the markets with many fund managers probably walking around feeling like Zombies and many clients perhaps wishing they could forget the last 10 to 11 months.


With fund valuations falling, we can expect the fund management industry to shrink and the death of certain funds leading them to be the ghosts of future Halloweens. The fund managers who manage to take away all the sweeties and treats will live to fight another Halloween. It is likely these fund managers have studied not only the ‘Halloween Strategy’ but many others as well and are able to keep their heads and focus on the reality of the present.


Astra would like to take this opportunity to wish all our clients and contacts a Happy Halloween and a prosperous and healthy last few months of the year!


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