BUY ON THE RUMOR, SELL ON THE NEWS

There is a lot of lore in the stock markets.  One is "Sell In May and Go Away."  In this case, selling stocks in May and rebuying after Halloween results in a 10% gain over "Buy and Hold."

We have just witnessed the application of another old adage which is" BUY ON THE RUMOR, SELL ON THE NEWS"  In the runup to the approval of the $2 Trillion Corononavirus Relief  Bill (Friday, March 27, 2020) for the economy, the stock markets rose precipitously for three days prior to the signing.   Not even record unemployment applications stopped the upsurge. When it became clear that the bill was going to be signed and approved on Friday, stocks crashed.  People not in the know were surprised at the decline, but I expected it.*

Incidentally, another important adage says "Markets can remain irrational longer than you can remain solvent." by John Maynard Keynes"  I refer to this one as the short sellers lament.  That is people who borrow (sell) a certain number of shares of stocks at one price and expect to pay the loan off by buying the stocks at a lower price making the difference between the selling price and the buying price.**  This is an advanced trading technique that I don't recommend for us retail investors.

Then there is The four most dangerous words in investing are: ‘this time it’s different’."
Sir John Templeton

* https://www.nbcnews.com/business/markets/stocks-fall-questions-rise-over-passage-2-trillion-economic-relief-n1170221
** https://www.investopedia.com/terms/s/shortselling.asp