This strategy is based on a history of the under performance by stocks from May to October and an over performance by stocks from November to April. According to the Stock Trader’s Almanac the Dow Jones Industrial Average has had an average return of only 0.3% during the May-Oct period and an average return of 7.50% during the Nov-Apr period. Why this happens no one really knows, but it’s been traditionally attributed to the lower volumes associated with investors exiting the stock market while on summer hiatus. But that’s only a guess. And how trading and investing will change over time due to the ever present and ubiquitous nature of the internet and the increase in mobile trading is anyone’s guess.
What I do know is that an investing strategy which includes Dividend Growth Investing will allow the smart investor to maintain a stream of income regardless of the direction of the market. And as much as Dividend Growth Investing takes some of the excitement out of investing, it more importantly takes a lot of the stress out of investing too.