Sell(ing) Rosh Hashanah, Buy Yom Kippur By: Jeffrey A. Hirsch | September 17, 2020 | Email | Print

As the High Holidays approach you may remember the old saying on the Street, “Sell Rosh Hashanah, Buy Yom Kippur.” It gets tossed around every autumn when the “high holidays” are on the minds of traders as many of their Jewish colleagues take off to observe the Jewish New Year and Day of Atonement. 

 

The basis for this, “Sell Rosh Hashanah, Buy Yom Kippur,” pattern is that with many traders and investors busy with religious observance and family, positions are closed out and volume fades creating a buying vacuum. Even in the age of algorithmic, computer, and high frequency trading these seasonal patterns persist as humans still need to turn the machines on and off and feed them money or take it away – and these algorithms and trading programs are written by people so the human influence is still there. 

 

Holiday seasonality around official market holidays is something we pay close attention to (page 100 Stock Trader’s Almanac). Actual stats on the most observed Hebrew holidays have been compiled in the table here. We present the data back to 1971 and when the holiday falls on a weekend the prior market close is used. It’s no coincidence that Rosh Hashanah and Yom Kippur fall in September and/or October, two dangerous and sometimes opportune months. 

 

 

Perhaps it’s Talmudic wisdom but, selling stocks before the eight-day span of the high holidays has avoided many declines, especially during uncertain times. While being long Yom Kippur to Passover has produced 59% more advances, half as many losses and average gains of 6.7%. 

 

This year the high holidays commence on Friday eve, September 18, and end Monday September 28 with Yom Kippur just before Octoberphobia. The current news flow already has folks selling ahead of the Jewish High Holidays, quite possibly setting up the market for further declines.