In the previous post, we have addressed one of the seasonal stock market anomalies, namely the strategy of “selling in May” and how it has fared for the Straits Times Index (STI).
From the data, it was established that the Singapore blue-chip benchmark typically turns in lackluster performance in May with an average return of -1.68% over the last 20 years. Within that time frame, the month of May was negative in 13 of those years.
In the midst of determining the seasonal effect, it has occurred that if most investors were selling in May, one may be tempted to conclude, albeit fallaciously, that May could possibly be the worst month for the local index in a given year.
Still, the question continues to linger in the inquisitive mind: Which are the best and worst months for the Straits Times Index?
Similarly, the Python code used to analyze the underlying data will be shared below. This time, I will utilize the existing