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Which Behavioral Patterns Create Investing Opportunities?

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You could say there are two kinds of traders: the “sell inMay, go away” crowd and those who see “sell in May” as a potentiallyexploitable market opportunity. If you’re the latter, you’ll find this Investment News article by Isaac Braleysuper-interesting: The Proof Behind “Sell in May, GoAway”.

While many human behavioral patterns influence stock-marketmovements, seasonal patterns are most scrutinized by economists – and they’ve found the “sell in May” pattern is both persistent and well-substantiated. Itdates back to Britain in 1694, in fact!

Notonly is “sell in May” a statistically verified pattern, the article exploressome of its other characteristics. For instance, “The authors noted that the scale of thesell in May effect is highly correlated to the length of a particular country'saverage summer vacation.” I take this to mean that, in countries like Francewhere practically everyone takes the entire month of August off, “sell in May”is a very pronounced phenomenon, whereas in countries like America with oursuper-short summer vacations, “sell in May” isn’t nearly so pronounced.

Whether you’re a “sellin May” type, or plan on trading beach-side with us all summer long, we wishyou great success and a hearty “welcome back!” to springtime.


Be Good,
Don Montanaro
CEO, TradeKing Group
www.tradeking.com

Follow Don on Twitter and hone your skills at TradeKing All-Stars. You can also followTradeKing on Twitter, Facebook, Google+ or YouTube.

[image: Seating Pattern – Olympic Park –Stratford, London by Natesh Ramasamy on Flickr]


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