“Sell in May and Go Away” is not new. The problem is it’s not consistent. It might even hurt you!
The term “Sell in May and Go Away!” is nothing new for investors. This exercise gets brought up every single year. And in 2024 it is complicated further because of the upcoming elections in November. And the implication of “Sell in May” was really to “Come back in November.”
The real issue about “Sell in May” is that it’s a coin toss over time. Maybe it’s a weighted coin. Then again, the first year an investing thesis goes against an investor then he or she is apt to cry “Foul!”
Don’t tell it to the weather people, but May is the real month that summer begins for the economy. College graduations take place. Or they are supposed to. High school graduations take place. And Memorial Day marks the first holiday of the summer. Vacations are supposed to take place, and almost all of the kids are out of school. It’s supposed to be more about cooking outside with friends. So why would anyone care about actively monitoring their money and the stock market?
Please be advised that if you just sold everything ahead of May or in the month of May, you might as well not ever bother to invest. Selling in May or ahead of May is more fiction than reality. Sure, some stocks sell-off big. Sure, sometimes the stock market experiences sizable corrections. But the “Sell in May” should have perhaps been named “Put a shopping list (for investments) together in May!”
This is not crystal ball for what happens in May of 2024. No prediction about what the markets do this summer. And it’s no prediction about how the rest of 2024 turns out. Still, avoid this generality of “Sell in May!”
WHO SAYS?
An April 23, 2024 blog post from Almanac Trader showed that from 1965 to 1984 the S&P 500 was down during the month of May 15 out of those 20 years. That’s consistent right? The next sentence also showed that from 1985 to 1997 the month of May was the best month for the S&P 500 with gains for 13 straight years.
So what about this being an election year in 2024? The year-end rally of 2023 saw only brief profit taking at the start of 2024, then stocks were off to the races. The S&P 500’s gain via the SPDR S&P 500 ETF Trust (NYSEArca: SPY) of 10.3% may have taken stocks up too much, but as of May 8 (2024) on last look the S&P 500 was down less than 2% from that peak.
AND ELSEWHERE?
The Wall Street Journal has two pieces from May 1 and May discussing “Sell in May.” One report says the “Sell in May” is not as useful as it once was, and the second says “May has been good to stocks in recent decades.”
BofA Securities also told its clients on May 7 – “Don’t sell in May and go away.” Their 24-page report summary pointed out that the S&P 500 is up 75% of the time from June-August period in Presidential election years with an average return of 7.3%.
IN THE END…
If you do your own online searches, or if you get one of your A.I. bots on it, chances are pretty high that you will be able to get the supporting answer for whatever opinion you already have. That’s human nature. It’s also the same nature for investors.
Perhaps the only consistency around “Sell in May” that appears to be fact-based for the last years is that “Sell in May” search results on Google for the U.S. rise in April. The caveat — this year the bump was smaller in April and the real escalation in “Sell in May” took place in January and then peaked in March. Now they just need to create a derivative to trade for Google Trends terms.
Treat your money well. Watch it. Monitor it. Make tweaks to it. And do that all year long. If you treat your nest egg badly or think you can neglect it, don’t be surprised when you see how poorly it treats you.