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Created: October 30, 2023
Modified: October 30, 2023

What is the “Halloween Strategy”?

Today’s question is: What is the ‘Halloween Strategy’?

The Halloween Strategy, sometimes known as the Halloween indicator, is the theory that if one were to buy stocks from November and hold them until May and then sell them, that one would outperform the market over a long period of time.

Let me tell you a little bit about the backstory of this interesting theory or observation. The idea is that hundreds of years ago, in the United Kingdom, wealthy oligarchs would go and vacation in their summer villas from May or June through October or November and largely forget or not really pay attention to their investment portfolios. Then, they’d come back and all of a sudden, it would be back to business as usual.

Fast forward a few centuries to the present day, and it is now referred to as the Halloween Strategy. Now, I don’t know about you, but generally speaking, when I think about things such as theories or observations or even general rules of thumbs, those are certainly things that I wouldn’t base a retirement plan on.

Is it something that might work every once in awhile throughout history? Sure, but it’s certainly not the basis of what a retirement plan or any investment plan should be based on.

My encouragement to you is to consider having a strategy that’s unique to yourself and a plan that is customized to your situation rather than following theories or some sort of indicator in the market that is beyond just sort of conventional wisdom.

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