Ask TheStreet: Rosh Hashanah Selling

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"Sell on Rosh Hashanah and buy on Yom Kippur" is an old saying on Wall Street that coincides with the Jewish High Holidays. What does it mean and, more importantly, does it work? Thanks, S.G.

That old Wall Street adage runs along the lines of "Sell in May and go away" or the so-called Super Bowl Indicator. It's one of those maxims based more on market lore than on fundamental analysis.

But hey, it gives traders something to talk about.

Rosh Hashanah, which marks the Jewish new year and literally means "head of the year," occurs on the first and second days of the Hebrew month of Tishri. Since the Jewish calendar, which is lunisolar, or based on the sun and moon, differs from the solar-based Gregorian calendar used by most people around the world, Rosh Hashanah does not fall on the same date each year.

It starts this year -- the Jewish year 5767 -- on the evening of Sept. 22, and runs through the weekend. Yom Kippur falls on Oct. 2.

Rosh Hashanah also kicks off what is known as the Days of Awe, a 10-day period of intense reflection that culminates on Yom Kippur, the Day of Atonement and the holiest day on the Jewish calendar.

In order to concentrate on their prayers instead of their portfolios, there was a time when many Jews would sell their holdings ahead of the Days of Awe, or "Sell on Rosh Hashanah and buy on Yom Kippur."

"The saying goes back to the 1920s, when it was said that this was the strategy of the Loebs and other prominent Jewish financiers, but it has not really been relevant since," says Larry Wachtel of Wachovia securities.

Another possibility, speculates Rabbi Michael Katz of Temple Beth Torah in Jericho, N.Y., is that it makes good financial sense.

"On Rosh Hashanah, things are good, upbeat and positive. We gather together, wish each other a Happy New Year and we feast. That is the perfect time to sell, when times are high. On the other hand, investors like to buy when the market is low, and Yom Kippur is a downer. We worry about being sealed for death, and we fast."

Since the Jewish High Holidays fluctuate each year, it is hard to get a definitive answer as to whether the strategy really works. Nevertheless, during the Days of Awe last year the S&P 500 dropped 4.1%, from 1228 to 1177. Immediately afterward, stocks sprinted upward, and the index closed the year -- on Dec. 31 of the Gregorian calendar, that is -- at 1248.

A divine run, indeed.