Sell Rosh Hashanah, buy Yom Kippur? Here's what the data shows
By Ryan Vlastelica
The Dow often falls between Rosh Hashanah and Yom Kippur, but the data isn't overwhelming
The U.S. stock market is at all-time highs and the Jewish high holidays are here. Are those two factors combined a reason to take some money off the table?
Making investment decisions based around religious holidays may seem like an arbitrary or foolish endeavor, but such a strategy--known unofficially as a "Sell Rosh Hashanah, Buy Yom Kippur" play--does have a modest historical track record indicating some success.
According to the Stock Trader's Almanac, which analyzed data going back to 1971, the Dow Jones Industrial Average falls an average of 0.6% between Rosh Hashanah, the Jewish New Year, and Yom Kippur, the Jewish Day of Atonement. This year, Rosh Hashanah begins the evening of Sept. 20 and ends the evening of Sept. 22. Yom Kippur begins the evening of Sept. 29, a Friday, and ends the following evening.
The data is skewed by the period in 2008, during the worst of the financial crisis, when the Dow plummeted nearly 21% between the two holidays. (On a median basis, the decline between the two holidays is 0.5%, rather than the 0.6% average.)
Historically speaking, the odds of the trade working are better than 50-50, but only just barely. Over the past 46 years, the Dow fell in 26 of the years and rose in the rest.
"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," said Christopher Mistal, director of research at Stock Trader's Almanac. "The basis for the new pattern is that with many traders and investors busy with religious observance and family, positions are closed out and volume fades creating a buying vacuum."