The Halloween Effect is a market timing strategy suggesting that stocks perform better from Oct. 31 to May 1. This strategy has shown strong returns historically, making it an intriguing market anomaly.
The Halloween Effect suggests buying stocks in November, holding them through the winter, and selling in April. This contrasts with the traditional buy-and-hold philosophy, which encourages investors to maintain consistent exposure to the market. The origins of the Halloween strategy can be traced back to the U.K. Wealthy individuals would retreat to their country estates during the summer, largely ignoring their investment portfolios until fall.
The Nasdaq 100, which reflects the tech sector’s performance, has generally shown strong returns from Oct. 31 to May 1 over the last ten years. This period favors sectors represented in the Nasdaq 100, which is heavily weighted toward technology and growth companies.
Halloween strategy’s seasonal stock gains
From 2013 to 2022, the Nasdaq 100 has consistently delivered impressive gains. Last year, the index started on October 31, 2023, at 12,000 points, and ended on May 1, 2024, at around 14,000, showing a notable increase.
Some of the best-performing tech stocks during this period include:
Nvidia: Soared approximately 66% from $38 to $100 per share. Nvidia also saw a surge from $340 to $470 per share. MicroStrategy: Experienced steady growth, evidencing strong returns during the Halloween effect period.
Exodus Movement, Inc.: Notable for impressive total returns of 479%. Zeta Global Holdings: Reported a 287% return. The Halloween Effect remains a fascinating aspect of stock market strategy.
It demonstrates that certain seasonal trends can yield substantial returns when leveraged correctly.
