Wednesday, September 1, 2010

"Secret Sauce" Makes a New High

The secret sauce was first revealed back in July 2008 when I had about 50 readers (and had no idea how to make charts "pretty").

What is the secret sauce? An alternative to the "sell in May, go away"; sell the S&P 500 in May and then invest in the Long Government / Credit bond index (rather than sit in cash). The "strategy" (I wouldn't necessarily call it that) takes advantage of the following data (mining) that shows the Long G/C has outperformed the equity market for the May through October time frame over this 36 year period.

Average Returns by Month

The cumulative result (as of month-end August) since August 1974 (Long G/C data only goes back to 1974).


Reader Norman comments:

A useable presentation would be to divide the 'secret sauce' by the S&P 500. The way you have it now its impossible to see if the ss has been performing well, lately.
Here you go...

And in log scale...

Source: Barclays Capital / S&P