It is the time of the year again! It is time for Getai, auction, eight-course dinner and the sycophants sucking up to the invited Ministers and Member of Parliaments (MP)!
For the superstitious and even the non-superstitious, you should not ignore this trend as long as you are a stock market investor because, for most years during the past decade, the Straits Times Index (STI) has tended to enter corrective phases during the Hungry Ghost Festival since 2008!
Don’t laugh it off just because you have not met one; investors who lost money during those corrections see one, figuratively!
If we were to delve deeper, it is not difficult to spot that the Hungry Ghost Festival in Singapore usually falls between the month of August, sometimes starting as early as July and ending as late as September. We have “sell in May and go away” and we can more or less be quite sure that “sell in August and hide your year-end bonus” has a higher probability of coming true compared to selling in May.
It is six down (some really horrid ones), two flat and two up! The odds are stacked quite heavily against staying invested in August. What for when you are going to lose money, right?
Below is the table to show you the performance of the STI in the months of August from 2008-2017:
Wah! Not worth it based on the historical pattern! At least we know the prices of the food and beverage got only one pattern – up, up and up! Never down!Source: Shares Investment
Let’s look at the probability here: Even if going down is only 60% chance, the down is really very, very down! On the other hand, the ups have been lackluster and as good as nothing.
The US market has been going up, up, up probably because they don’t have Hungry Ghost Festival there! But here in Singapore, we do have and the trend tells us that we have to believe. Better to err on the wrong side, right?
The STI has been down, down and down. No Viagra. Three steps backwards, one step forward. This means lower-low in terms of technical analysis, right?
Stacked against all odds, forget about the STI! Go listen to Getai better.