Myth or Math?
We have tested 10 popular trading beliefs so far: 3 MATH, 3 MYTH and 4 HALF-TRUTH. Each was written down as an exact rule before the test, and a rule fixed in advance gave the verdict.
Which trading beliefs have we tested?
Here is every belief we have tested so far, with its verdict and the short answer.
| Belief | Verdict | Short answer |
|---|---|---|
| Do stocks rally after the midterms? | HALF-TRUTH | Half-truth. Midterm years have lagged before the vote. The year after beat other years by +7.4 points on average since 1926, but not in the last 20 years. |
| Do stocks rise before holidays? | MATH | Math. Since 1926, the day before a market holiday averaged +0.26% above cash, against +0.02% on other days. In the last 20 years: +0.17% against +0.04%. |
| Do markets love gridlock? | MYTH | Myth. Since 1927, divided years averaged +6.8% above cash, against +10.9% for one-party years. In the last 20 years: a near tie, +11.1% against +10.9%. |
| Does "sell in May and go away" really work? | HALF-TRUTH | Half-truth. Since 1926, May to October trailed November to April by 3.8 points on average, and by 2.5 points in the last 20 years. But summers still beat cash. |
| Does triple witching move stocks? | MYTH | Myth. Since 1983, triple-witching Fridays moved a little less than other Fridays, not more: 0.65% against 0.73%. In the last 20 years: 0.70% against 0.80%. |
| Is the Santa Claus rally real? | HALF-TRUTH | Half-truth. Santa's seven days beat an ordinary seven-day stretch by 1.2 points since 1926, and by 0.2 points in the last 20 years. A no-show Santa didn't reliably spoil the year. |
| Does window dressing lift stocks at quarter-end? | MYTH | Myth. Since 1926, a quarter's last five trading days averaged +0.10% above cash, against +0.15% for an ordinary five-day stretch. In the last 20 years: +0.15% against +0.24%. |
| Is the January effect real? | MATH | Math, but much smaller now. From 1927 to 2026, small stocks beat large stocks by 6.2 points more in January than in other months. In the last 20 years: 1.2 points. |
| Do the first five days of January predict the year? | HALF-TRUTH | Half-truth. After an up start, the rest of the year beat cash by 10.2 points more than after a down one (15.5 points in the last 20 years). Better odds faded. |
| Are Mondays bad for stocks? | MATH | Math. Since 1926, Mondays trailed Tuesdays to Fridays by 0.16 points a day. In the last 20 years the gap was just 0.04 points, and Mondays averaged +0.02% above cash. |
How do we test a belief?
We write the belief down as an exact rule before we see any result, then test it on decades of data.
The fair comparison and the rule that decides the verdict are fixed in advance too. Read how we test a myth.
What do the verdicts mean?
Each verdict is one of five words, and each word has one meaning.
- MATHThe belief held up. It beat its fair comparison and passed every check we set in advance.
- MYTHThe belief did no better than its fair comparison, or did worse. It never means you should do the opposite.
- HALF-TRUTHPart of the belief held up and part of it did not. The article shows which part is which.
- FADEDIt worked before it became famous, then stopped working.
- UNTESTABLE AS STATEDThe belief has no exact definition, so we show how far apart its common versions land.
Which kinds of beliefs do we test?
So far we have tested calendar effects: beliefs that stocks do better or worse at certain times of the year, month or week.
See every calendar effect we tested. More kinds of beliefs will follow.
Is this investment advice?
No, these pages are educational and describe the past, which does not predict the future.
Returns are before taxes. A MYTH verdict means a rule did not beat its fair comparison, not that you should do the opposite.