Market Commentary - 5.2.13

Is it Time to Sell in May and Go Away?

There is a common trading proverb that warns investors to annually sell their stocks in May, in order to avoid summer market weakness, and repurchase in November. With April coming to an end, we want to examine this market adage for accuracy and, if proven true, discuss ways to minimize its effect on investment portfolios.

Let's start with the facts about this strategy, referred to by most investors as "sell in May and go away." Over the long term, excluding dividends, the average return of the S&P 500 between May 1st and October 31st has underperformed the average return of this same index between November 1st and April 30th. In the table below, you can see the sizeable difference in average returns during those time periods since 1957 and in the most recent ten-year period.