"Perhaps it's Talmudic wisdom but, selling stocks before the eight-day span of the high holidays has avoided many declines, especially during uncertain times."
- "Jazzy" Jeff Hirsch, The Stock Trader's Almanac
The old axiom on Wall Street says that investors should sell on Rosh Hashanah and buy on Yom Kippur. It appears to be based on the view in the Jewish religion that Jews should be free as possible during this 10-day period of reflection and self-appraisal of the distraction of worldly goods.
Supposedly, Bernard Baruch once sold out on Rosh Hashanah (out of deference to his mother) and avoided a huge market decline during the High Holy Days.
Based on the analysis of The Stock Traders Almanac's Jeff Hirsch, there seems to be some truth in the phase. Here is Jeff's data from 1971 -2018 which indicates that in fact there is a statistical validity to the adage - with the DJIA losing on average about -0.5% between Rosh Hashanah and Yom Kippur and with 22 years of advancing stocks and 26 stocks declining stocks:
I am on board with Bernard Baruch and Jeff Hirsch - but with a little modification to the adage of "Sell on Rosh Hashanah and Buy on Yom Kippur."
I prefer "Sell on Rosh Hashanah and Buy At The End of Sukkot!" (After all, if reason, my ursine market analysis and all else fails... why not?)
Today is September 28, Rosh Hashanah starts on September 29 and ends on October 1. Yom Kippur starts on October 8 and ends on October 9.
Selling on Rosh Hashanah and buying on Yom Kippur may not work this year, in the face of the pressures of this week's technical break in the averages, the global economic headwinds and the ongoing political drama - we just might need a bit more time, maybe another week and a half or so beyond the end of Yom Kippur!
Fortunately we Jews have another holiday that follows Yom Kippur - Sukkot.
What might work over the remainder of 2019 is: "Selling on the first day of Rosh Hashanah and buying on the last day of Sukkot (called Hoshana Rabbah at least that was what Citigroup's Tobias Levkovich told me a few years ago!)."
Sukkot begins on Sunday evening, October 13, and ends on Sunday evening October 20.
Sukkot is the holiday in the Jewish religion that commemorates the 40 years of Jews wandering in the desert after the giving of the Torah atop Mt Sinai. The holiday is celebrated five days after Yom Kippur, and is the only Jewish festival associated with an explicit commandment to rejoice - in the bounty of the Earth during the fall harvest.
The bounty of a fall harvest may lie ahead - but from lower levels (and we need more time than until Yom Kippur!). So let's make it Sukkot!
(This commentary originally appeared on Real Money Pro on September 27. Click here to learn about this dynamic market information service for active traders and to receive Doug Kass's Daily Diary and columns from Paul Price, Bret Jensen and others.)
