Technical Pulse: Should you ‘’Sell in May and Go Away’’? Maybe not it seems April 10, 2023 720

“Sell in May and go away” is an investing adage that says an investor can improve annual returns by selling stocks in May and not reinvesting until November. The phrase originated from an English saying, “Sell in May and go away, and come on back on St. Leger’s Day”. St. Leger’s Day refers to the St. Leger’s Stakes, a thoroughbred horse race held in mid-September with the custom of leaving the city of London for the countryside to escape the hot summer months. When applied to the stock market, it refers to the seasonal market performance where summer months have historically averaged lower returns compared to others.

Why would an investor sell at this time of the year? Is there any relevance to this? 


Possible Reasons & Statistics: 

  • Investors have a belief that when summer begins, the lack of market participants due to vacation breaks can create a low volume, low return environment
  • Seasonality in investment flows may persist as a result of year-end financial industry and business bonuses, with the mid-April U.S. income tax filing deadline possibly contributing
  • For the Singapore market, most companies pay out dividends in May & June annually thus dividend-seeking investors may look to hold out buying stocks after these months until dip opportunities are presented
  • From 1990 to 2022, the S&P 500 has returned about 2% from May to October, while November to April has averaged about 7%
  • The average gain for the Dow Jones in the top 10 years for the November to April period was 27.5%, compared with an average 2.9% in the ensuing May to October periods


When we look at the S&P 500’s returns in May for the past 30 years from 1993 to 2022, it has yield gains in 21 of the 30 years (70%) with an average return of 0.56%. It has seldom been among the top 3 worst performing months annually, only in 5 of the 30 years (16.7%) even though it is usually the worst performing month of the year (80% of the time) when it belongs in this category. Even when faced with a negative May, the S&P 500 has generated positive annual returns in 7 of those 9 years (77.8%) with decent average returns of 9.04%. In addition, the worst performing month is usually spread evenly throughout the year, April & December are the best performing months while May, September and October share the same frequency of being the worst months.




While the seasonal market performance where the months of May to October have historically averaged lower returns compared to November to April generally holds, gains were still observed in these months. Also, May has usually been a decent month most of the time even though it tends to be the worst month if it belongs among the top 3 worst performing months of the year. Investors should remain vested through the period come May as the predictive power of this adage is questionable and opportunity costs incurred of not staying vested could be significant especially as the saying has been off the mark in the last decade – only once has May posted negative returns. Also, if enough people were convinced of this adage it would lose its effect as well since early bird sellers would try to sell in advance in April and bid ahead of the pack to buy back before November.





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About the author

Profile photo of Zane Aw

Zane Aw
Technical Analyst

I analyze the stock market and conduct technical analysis to provide investment recommendations. I look forward to having a conversation with you in our in-house seminars and presentations to identify good risk-reward trading strategies together. I graduated from Nanyang Technological University with a Bachelor of Accountancy (Honours).

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