Sell in May… or So They Say

Monday marked the first trading day of May.

With that flip of the calendar page, investors are wondering whether or not they should follow the old adage: “Sell in May and go away.”

Like so many investing adages, there’s an element of truth to this one… and many caveats. Ultimately, your decision to follow or ignore this market-timing strategy depends on how you invest and protect capital.

Buy-and-hold investors might do well to heed the advice.

But for other investors, particularly those of us who employ active and statistically sound strategies, the “sell in May” advice isn’t all that helpful. In fact, following the advice blindly would actually undermine my strategy’s long-term return potential.

Let me walk you through a few research studies that show why there’s nothing to fear (“but fear itself,” perhaps) in May.

We’ll start with a look at this chart: