QUICK QUOTES
Sell in May and Go Away
In last year’s blog by the same title, dated 4-18-25, and in our publication, When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology (available on Amazon), we explain this old saying in the stock market world that refers to the concept of selling all your holdings in the month of May, and buying them back in October. However, actual statistics may not quite favor this strategy, as again was the case last Spring…
Over almost the last century, May (as well as February) has traditionally produced a -0.1% return, 2nd only to September’s – 1%. The time frame ranging from May - October has returned only an average of 2.5%, while November - April has returned a little over 5%, suggesting there may be some truth to the statement.
However, studies have found that the month of July, which occurs in the middle of the “slower” period, is now the 2nd HIGHEST returning month of the year on average (November is the first), followed by April, December and January.
Additionally, over the same time period, May has seen positive returns about 60% of the time, higher than 5 other months! Over the past 25 years that percentage has held true (with most losing years contained to 2006-2015), however in the last 10 years (since 2016), May has been positive 90% of the time. These gains are sometimes very minimal, but it does suggest the sentiment has changed, and it may be a good time to re-evaluate a portfolio while markets are calm.
There has been a shift in the last 20 years, with August’s returns turning negative and September’s average loss increasing, despite gains the past 2 years. December’s average gain has been reduced by about 0.5%, while March has also suffered an average decrease, which spiked to -5.1% this year, mainly due to the military conflict. November has become the leading month for average gains over the last 2 decades, at 3.5%, though this year slumped -4.4% before a massive rally in the final week pulled it even, while July remains 2nd at 2.1%.
There are several internal factors that create these figures, including the fact that this old adage may very well be a “self-fulfilling prophecy,” which causes some of these well-known cycles to start a bit early. There are always those who will attempt to get ahead of the crowd, and either buy or sell early. Last May, 2025, the S&P 500 surged almost 400 points, after market cycle lows in early April, due to tariff issues. This may have been an unusual event, though this year’s military conflict has seen similar reactions.
The truth is, with May’s recent success, there are much worse performing months, like February, March, August, and September (2024/2025 was an anomaly for September), which would suggest selling (for those who swing trade) in late July (the 2nd best month) or early August. The funkiest, or most inconsistent months, tend to be October and March, often with wild swings and added volatility. That would suggest being patient from February through early April, and from early August through October, to watch for any confirmed trend reversals. This year, a large selloff occurred from February through early April, followed by a massive recovery up to the date of this article. That suggests a potential pullback in May, if not before, this time around. Overall, there is not expected to be a major downturn in May, though that could possibly hinge on the status of the Middle-East conflict.
Shorter term traders, who wish to take advantage of volatility throughout the year, usually ignore this concept and look for opportunities during any time-period.
Long term investors are not very fond of this concept, as you would imagine, and often just close their eyes and cross their fingers (especially those with 401k’s and IRA’s). Although history certainly favors the November-April time frame, long-term investors should not fret “Sell in May, and Go Away,” as the market often rallies in July and rebounds from pullbacks by the Fall. Rather, they should look for opportunities during large pullbacks to add strong stocks. As you can see, even if May doesn’t perform well, it rarely “crashes,” suggesting selling for long-term investors may be gauged more by tax implications or age appropriation.
Astrologically speaking, the recent Mercury Retrograde period, in late February and March, weighed on markets (as usual). Combined with other significant movements from planets including the Saturn/Neptune conjunction while entering the sign of Aries, and Uranus’ long-awaited ingress to Gemini (next Friday, Apr 25), the downturn quickly, and unexpectedly (Uranus), has propelled the markets to new highs over the past 2 weeks. Fast recoveries are easy to miss, and investors should not chase over-extended conditions.
Remember to develop your own plan, stick with it, and don’t let emotion affect your investing/trading strategies!
***As always, this information is not intended to be financial advice, or any specific buy or sell recommendation, but rather a guide to assist the reader in some further understanding of the financial markets.
