The Easy Money Has Been Made

Making money is never easy in the market and keeping it is even tougher.  However there are certain periods where making money in the market is easier than others.  For example now that we have entered the month of May all I have heard and seen is how we all should sell in May and go away, and like everything else it is never that easy but it is always good to know when usually the market is in a favorable profitable period.   I want to keep it simple and show you some charts on the Russell 2000 that shows you what an easy money and tough period looks like.  Like my friend Joe Fahmy says; “the market is healthy 2-3 times a year”.

2013 click to enlarge

RUT

2011-2012

2011-2012_rut

2010-2011

RUT2010_2011

You can go back many years and you will find similar patterns.  And by looking at these charts you can conclude a few things;

  • The easy money usually comes after deep corrections, this is why you hear many say; “learn how to embrace corrections”.
  • The churn and burn period usually last 3-6 months hence the terms “umbrella tops”, “tops are a process”, etc…
  • You can probably guess what strategies, formulas, style work in the easy money period and the churn and burn period.

If your really want to know the details of Sell In May and go away then look no further–PastStat.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.


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