The Seasonal Strategy No One's Talking About

Why the little-known 'Sell Rosh Hashanah, Buy Yom Kippur' strategy may merit consideration

Sep 14, 2015 at 3:10 PM
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Anyone who's been following the market long enough knows there are a bunch of catchy strategies, such as "Sell in May and Go Away." One lesser-known tactic employed by some is "Sell Rosh Hashanah, Buy Yom Kippur." This, of course, refers to the two Jewish holidays that usually occur in September or October, roughly six trading days apart.

To see if the strategy has any merit, I enlisted the help of Schaeffer's Senior Quantitative Analyst Rocky White, who put together the two charts immediately below. As you can see from the S&P 500 Index (SPX) returns, it's not necessarily a bad idea to head to the sidelines on Rosh Hashanah (which started last night) and get back in on Yom Kippur (which ends next Wednesday night, Sept. 23).


Going back to 1950, the time period between the two holidays averages a loss of 0.3%, and is positive less than half the time. By contrast, the SPX anytime return over an average six-day period is 0.2%, with 56.7% positive. The same trend holds up looking back just 20 years. The six sessions between Rosh Hashanah and Yom Kippur sport a typical loss of 0.9% and are positive only 40% of the time, versus an anytime gain of 0.2% and 57.4% positive returns.

The final chart looks more closely at the SPX returns between the two holidays. As the chart below makes clear, to calculate returns, White used the closing price on the first evening of Rosh Hashanah (or before, in the case of a weekend), through the end of Yom Kippur. The most interesting thing to note is that subscribers to this strategy saved themselves from a colossal 17.8% loss during the 2008 market crash.




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