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.

  1. Calendar Effect

    A collection of assorted theories that assert that certain days, ...
  2. Trading Strategy

    A set of objective rules designating the conditions that must ...
  3. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. ...
  4. Investment Strategy

    An investment strategy is an investor's plan of attack to guide ...
  5. October Effect

    The October effect is a theory that stocks tend to decline during ...
  6. Buy And Hold

    A passive investment strategy in which an investor buys stocks ...
Related Articles
  1. Personal Finance

    Why The Halloween Industry Is Worth $8 Billion

    With more adults dressing up for Halloween each year, this unique industry is pulling in record profits.
  2. Investing

    Halloween Sales Provide Sweetener For U.S. Economy

    Halloween sales will rise 5.5 percent from last year and the biggest jump since 2011, according to IHS Global Insight
  3. Investing

    Best Buy Kicks Off the Holiday Season Early

    The holiday shopping season keeps creeping earlier. What once used to kick off on Black Friday has already taken over the whole month of November, and now, it's encroaching on Halloween. Case ...
  4. Investing

    The Truth About "Sell in May and Go Away"

    An old investing adage is "Sell and May and Go Away," i.e., sell before seasonal market declines in summer, then buy in the fall. Do the facts support it?
  5. Investing

    Here's What Target Has Planned for Black Friday

    The Halloween decorations have barely been put away, and major retailers are gearing up for Christmas. But even though many have already starting offering specials and promotions, Black Friday ...
  6. Investing

    Are Stocks Getting Too Pricey?

    It's important to look at several factors when determining if the stock market will keep rising.
  7. Managing Wealth

    Invest Like A Pro

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

    How Dividend Reinvestment Grows Your Money Faster

    Dividend reinvestment is a smart strategy for growing your investments faster over the long term, but it’s not a get-rich-quick proposition.
  9. Insights

    Top 5 Grossing Horror And Thriller Movies

    These films, which are great to watch around Halloween, have proven to be extremely lucrative at the box office.
  10. Trading

    Using Technical Indicators To Develop Trading Strategies

    Unfortunately, there is no perfect investment strategy that will guarantee success, but you can find the indicators and strategies that will work best for your position.
  1. Why are credit cards able to charge such high interest rates compared to other lenders?

    A true financial horror story began on Halloween in 1978. On that date, the Supreme Court began hearing Marquette National ... Read Answer >>
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  3. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  6. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
Trading Center