Is it likely that pricing anomalies will persist over time

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Reference no: EM131304458

There is an old saying on Wall Street: "Sell in May and Go Away." This saying means that stock prices typically do not do well over the summer months. A blogger at the Wall Street Journal explains the reasoning: What's up with "Sell in May and Go Away"? This must be the most telegraphed trading system out there. The idea is that traders go away, go on vacation, school is out, the summer doldrums, etc. all add up to it being a dull (or worse) market from May through September.

a. Is "Sell in May and Go Away" an example of a pricing anomaly? Briefly explain.

b. If "Sell in May and Go Away" is a pricing anomaly, how would you be able to use it to earn an above-average return?

c. Is it likely that pricing anomalies will persist over time?

Reference no: EM131304458

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