The Best Six Months

Here's a seasonal indicator that many investors find believable. It's called the Best Six Months, and was originated by Yale Hirsch, founder and Editor at Large of the Stock Trader's Almanac.

It says that your stock investments will do far better in the six months beginning in November and ending in April than in the other six months beginning in May and ending in October. As the Wall Street cliche says: “Sell in May and go away.”

If you track the Dow Jones Industrial Average's winter half-year versus summer half-year performance since 1950, the difference, on average, is stunning. The average gain for the six winter months through 2009 is 7.4 percent. The average gain for the six summer months is 0.4 percent, in other words, virtually nothing. Over a period of 60 years, it appears that virtually all the market's gains have come in the winter.