Halloween Strategy

What is a 'Halloween Strategy'

A Halloween strategy is an investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market until October 31, in order to increase capital gains. The Halloween strategy is based on the premise that most capital gains are made between October 31 (Halloween) and May 1, and that the other six months of the year should be spent investing in other investment types or not at all.

BREAKING DOWN 'Halloween Strategy'

The Halloween strategy is closely-related to the phrase, "Sell in May and then walk away," referring to the six months between May 1 and October 31. This strategy is heavily based on the concept of seasonality, specifically that stocks perform better in the winter months than they do in the summer months. This strategy is contrary to the buy-and-hold strategy, in which an investor may ride out down months.

RELATED TERMS
  1. Calendar Effect

    A collection of assorted theories that assert that certain days, ...
  2. October Effect

    The theory that stocks tend to decline during the month of October. ...
  3. Buy And Hold

    A passive investment strategy in which an investor buys stocks ...
  4. Cash Neutral

    An investment strategy strategy that requires no net cash in ...
  5. CD Ladder

    A strategy in which an investor divides the amount of money to ...
  6. Capital Gains Tax

    A type of tax levied on capital gains incurred by individuals ...
Related Articles
  1. Personal Finance

    Don't Let Halloween Haunt Your Bank Account

    With Halloween celebrations getting ever-more elaborate, families can end up spending a fortune. Here, 10 tips to help keep costs down.
  2. Managing Wealth

    Understanding Capital Gains

    Capital gain refers to the increase in value of a capital asset or an investment security upon sale. In other words, if you buy company stock, real estate or fine art and then sell it for more ...
  3. Investing

    The Key To High Returns Is A Disciplined Strategy

    Learn about different investment strategies and how to pick the right one for you.
  4. Trading

    4 Steps To Creating A Better Investment Strategy

    Make your trading safer and more streamlined by following these simple guidelines.
  5. Trading

    Invest Like A Pro

    By following the strategies of the pros, even a beginner can learn to invest like an expert.
  6. Investing

    Short Selling

    Learn more about this trading strategy where the investor profits from the decline of a stock price.
  7. Personal Finance

    Capital Gains Tax 101

    Find out how taxes are applied to your investment returns and how you can reduce your tax burden.
  8. Managing Wealth

    Don’t Let Emerging Markets Scare You

    Concerns over global growth and rising rates have pushed emerging markets in a diversified portfolio out of this space, but our research shows otherwise.
  9. Investing

    Investment Strategy Case Study: Traditional Vs. Alternatives for 2016

    Learn more about some types of alternative investments and why you should consider adding them in your portfolio in 2016.
  10. Investing

    Six Steps To Maximize Your Income Investments

    There's an adage that suggests investors should "sell in May and go away." It's based on the theory that the market underperforms from May to October. And there have been a few academic studies ...
RELATED FAQS
  1. How does Halloween affect the economy?

    Discover some of the differing ways in which economists evaluate the impact of Halloween on the American economy and whether ... Read Answer >>
  2. Where do investors tend to put their money in a bear market?

  3. What is the difference between capital gains and investment income?

    Learn about the difference between capital gains and other types of investment income, such as dividends paid on stock or ... Read Answer >>
  4. How does a person gain from an investment?

    There are two main ways in which a person gains from an investment. The first is by capital gains, the difference between ... Read Answer >>
  5. What is the difference between dividends and capital gains?

    Read about some of the differences between dividends and capital gains, the two primary ways of accumulating wealth through ... Read Answer >>
  6. Is there a difference between capital gains and dividend income?

    Selling something for a profits leads to capital gains. A payment made by a corporations to stockholders is a dividend. Both ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center