Sell in May and Go Away

There is a saying in the investing community to sell in may and go away, referring to selling your stocks and staying away from the market for six months before buying back in around October or November.  The reason is that historically, the six months following May tend to underperform the six months leading up to it.  In both 2010 and 2011, the stock market peaked at the end of April and it looks like this year has been the same.  For 2012, April had been the shaky month but the S&P 500 had increased about 11% until the end of April.  And since then, the market has fallen around 6%.

Delaying Gratification

Have you ever heard of the marshmallow test?  It is a really interesting (and cute!) experiment looks at whether or not four-year-old children are able to delay the gratification of eating a marshmallow for 20 minutes in order to get a second marshmallow.  According to the youtube video description, those kids who were able to wait had higher SAT scores of 210 points on average.  I had learned more about this is my psychology class as we talked about the id which is our instinctual desire to eat the marshmallow immediately, the super-ego which says we shouldn't eat the marshmallow at all since it has no nutritional value, and the ego which says we should do as the experimenter suggests to get twice as many marshmallows and as a four year old we don't have to worry as much about nutritional value just yet.

Personal Finance Overview

It has been a little more than a year since I first started this blog, and I think it would be appropriate to summarize the main takeaways from all the information I have so far compiled on this site.  The overarching problem I try to address is that we are going to need money for our entire life over our entire life.  The problem is that the time when we earn money isn't as evenly spread out with most of us earning a lot more in the middle of our lives rather than near the beginning and end.  When we are kids, our parents help provide for us but when we grow old, we will rely on our middle-aged selves to push some of the income into retirement through saving.  And we look at the process through the lens of personal finance.

Research Labs

As a young adult, we often try to focus on increasing our income as much as we can.  Students with part-time jobs don't earn very much, so it's important to find alternate sources of income.  Passive income from dividends and interest don't amount to very much unless you already have a lot of money and alternate sources of income generally amount to other part-time jobs.  However, especially for college students, research labs provide an excellent opportunity to make a little money on the side by simply giving some time to fill out surveys or participate in simple experiments.