Tag Archives: Sell in May and go away

Some market participants may be looking to heed the advice of the old market proverb "Sell in May and Go Away". The question this article seeks to answer is whether this calendar effect is spurious, or whether this is something readers should heed.

The saying “sell in May and go away” infers that the stock market is seasonally weak from May to September and, as such, one should not own stocks during that period of time. As illustrated in the chart below, however, the stock market is not particularly bearish then. It is merely less bullish (i.e. the odds of the market going down vs. up are equivalent). That’s why “sell in May and go away” is not a good trading strategy. Let me illustrate that fact further in the 10 charts below.

One of the most enduring of Wall Street axioms - falling somewhere under "buy low and sell high" but above "greed is good" - is to "sell in May and go away" and, indeed, there appeared to be some truth to the saying. Between 1950 and 2012, the Dow Jones gained an average of 7.6% annually during the November-April period, but only 0.4% during May-October. Does "Sell In May and Go Away" still hold true as a viable investment strategy? Not according to my analysis. Here's why.

Many articles have been posted today, May 1st, regarding the investing adage "sell in May and go away". Below are links to 10 such articles on the subject to help you decide what course of action you should take.

Taking profits is rarely a bad idea, and staying fully invested at these levels seems foolish. That is why it might pay to raise some capital now, before the sell in May strategy comes up. Having a core position of equities along with some dry powder and keeping a look out for short-term trading opportunities is how I plan to play this market through 2013. [This article presents 5 specific reasons why it might be wise sell in May and go away - or even sooner - this year.] Words: 1280

[The adage "sell in May and go away" refers to selling one's stocks in May, going into cash, and then waiting until November before buying back into the market. That] has worked the past two years...[This time round, however,] we believe there is a high probability that you would be buying at a higher price [in November] than... [what if you were to sell out] in May of 2012. [Let us explain why we are of that view.] Words: 406

After the volatility in the markets [recently] I decided to take a look at the major indices to see how accurate the "sell in May and go away" [i.e. "buy in on November 1st, and sell out the last trading day of April"] trading philosophy was in protecting investors this year [and] was astounded [to see] that all three indices (the Russell 2000 Value Index, the S&P 500 and the Dow Jones Industrials) had highs on April 29th and have not hit those highs since. With what has happened in the markets lately, however, might it be time to get back into equities? Words: 695