Why you should let data and not market beliefs guide your investment decisions
Modi believes that price is the most important factor in investing. He is credited with developing the AIRM (TM), an approach to screening stocks and businesses in a scientific manner. His role model is Warren Buffett.
Synopsis Contrary to the popular "Sell in May and go away" adage, data suggests Indian stock markets perform better from May to October, averaging 7.6% returns compared to November-April's 4%. Analyzing a decade of trends reveals May, June, and July historically show strong probabilities of positive returns. In God we trust, everybody else brings data to the table. It was originally framed by renowned statistician Dr. W. Edwards Deming. But in India, it was popularized by Mr. Narayana Murthy, founder of Infosys - indicating that while faith has its place, but in the world of markets and business - data beats noise.
ADVERTISEMENT There is a popular saying in the West that creates lots of noise when the month of May starts: 'Sell in May and go away.' The belief is that stock markets tend to underperform from May to October and do better from November to April. Since this is an age old adage nobody questions it.
From the above data, it's evident that despite the second half of the year being packed with major festivals and events, the six-month period from November to April delivered modest average returns of just 4%, with only 6 out of 10 years ending in the green.Surprisingly, the supposedly weaker period - May to October - performed significantly better, delivering an average return of 7.6%, with 8 out of 10 years showing positive results.
ADVERTISEMENT Let's go even deeper and examine the upcoming months individually (May, June, and July)
The data further reveals that the upcoming months - May, June, and July- have historically shown strong probabilities of delivering positive returns, reinforcing the importance of relying on data instead of market myths.
ADVERTISEMENT May, in particular, has performed well across the past decade, often kicking off the summer period on a strong note.As we've seen, markets are often clouded by assumptions and popular narratives. But when we remove the noise and look purely at data, a different perspective emerges - one of steady performance and resilience, even during months traditionally viewed with caution.
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The recent market recovery, the return of foreign investors, and a decade's worth of historical trends all point to the same insight: short-term fear shouldn't drive long-term decisions. As responsible market participants one must rely on evidence, not emotion. This is the time to stay informed, stay objective, and let data - not outdated beliefs - guide our next move.
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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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