“Sell on Rosh Hashanah, buy on Yom Kippur” is a popular Wall Street saying. In 2022, the strategy is not looking good.
Sell on Rosh Hashanah: Rosh Hashanah marks the Jewish New Year and is usually celebrated about a week before Yom Kippur. Rosh Hashanah was Monday, September 26th SPDR S&P 500 ETF Trust SPY opened at $366 and closed a few dollars lower on the day.
On Wednesday, October 5th, the S&P 500 tracking ETF is trading around $376 and you would have missed out on some gains if you had sold on that day.
So the first part of the strategy, selling to Rosh Hashanah, didn’t work.
Buy on Yom Kippur: Jews around the world celebrate Yom Kippur, a somber Day of Atonement. since 1950, October has historically been decent for stock returns and November was great.
But this year there are many macro headwinds that are crippling the market. As of now, the Federal Reserve maintained his hawkish stanceso that an investor could expect somewhat subdued yields in the meantime.
The “buy on Yom Kippur” advice will only work if economic data gives investors confidence that the Federal Reserve does not need to keep raising interest rates at the current pace.
Nonfarm payrolls are released on Friday, which should be a strong indicator of whether the Fed’s actions have indeed slowed the job market.
(If so, that’s good news for the stock market.)
In summary, the two-legged “sell on Rosh Hashanah, buy on Yom Kippur” strategy is zero-to-one since Rosh Hashanah investors would have been better off holding or even buying.
The second pillar “Buy on Yom Kippur” remains to be seen. This will likely depend on the Fed’s rate plans and macroeconomic outlook.
Photo: Adelia Cohen via Shutterstock
