Sell Rosh Hashana and buy Yom Kippur, the old Wall Street adage has it. A new study by researchers at a Florida university validates the Stock Trader’s Almanac trick enshrined on page 88 of the classic compendium of historical market data.
Researchers at Nova Southeastern University in a just released study say the strategy does indeed boost stock market returns. Pan Yatrakis, who co-authored the study with Albert Williams, said in a news release last week:
“Observant Jewish traders represent a small proportion of all market participants but, at the margin, their withdrawal during the High Holy Days thins out the market, increases volatility and risk, and may discourage others from trading as well, thus creating a snowball effect.”
The South Florida Business Journal reports that the study looked at closing values of the Dow Jones Industrial Average from 1907 to 2008 and found that selling stocks before Rosh Hashana and buying after Yom Kippur netted a 1% average return.
The study adds to findings by other scholars confirming that trading volume declines significantly on both Rosh Hashana and Yom Kippur, associating the former with positive returns and the latter with sharp sell-offs.