The Truth Behind ‘Sell In May & Go Away’

We take a look at whether ‘sell in May and go away’ is good advice for investors.

Reviewed by: Sumit Roy
Edited by: Sumit Roy
"Sell in May and go away" is one of those popular market adages that is thrown around every year around this time. This year, in particular, many people are bringing it up now that the stock market is struggling after a strong rally in February, March and April.

As of this writing, the S&P 500 was down 0.8% in May after falling 5.1% in January, rising 0.4% in February, surging 6.6% in March and rising 0.3% in April.

Do these month-to-month gyrations tell us anything, and is there any wisdom in the "sell in May" adage?

Strategy Underperforms

For all intents and purposes, these monthly gyrations are irrelevant for most long-term investors. As a past article on points out, the return for the S&P 500 in the May-through-October period―the six-month time frame for which "sell in May proponents" argue to be out of the market―has actually been positive historically.

It turns out that an investor would underperform a buy-and-hold strategy by about 1.5% annually for being out of the market for those six months. That's without even considering transaction costs and tax considerations.

Sell Before August?

That said, it's undeniable that the stock market exhibits seasonal tendencies. A look at the data reveals that the monthly returns for May through September pale in comparison with the returns for October through April.

Below are the average monthly returns (excluding dividends) for the S&P 500 by month since 1950:

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1.03 0.05 1.17 1.48 0.21 -0.03 0.98 -0.09 -0.52 0.94 1.50 1.62

This may be where the "sell in May and go away" adage comes from. Returns for the month of May are weak, while June, August and September are down months for the market, on average.On the other hand, returns for each of the other months (excluding February) are stellar, with gains of 1% or more.

The data also reveal why the "sell in May" strategy fails. Even though returns for June, August and September have historically been negative, the gain in July more than makes up for that.

Moreover, October has actually been a good month on average, contrary to popular perception (the negative reputation likely stems from the fact that two big market crashes in 1987 and 2008 took place in that month).

Perhaps the adage should be "sell before August and come back in September." The latter has been an especially poor month for performance, with the market falling in September during 40 of the past 65 years.

Seasonality Is Real
Putting the historical data in chart form yields this:

The flattening in the market starting in May (and the modest sell-off after July) is clear to see, but as stated previously, it's not something most investors should do anything about.

On the other hand, short-term traders could benefit by taking more aggressive trades during certain times of the year and avoiding the market during the other times.

But like any active trading approach, it's a risky strategy compared with simply buying and holding for the long term (especially since, in any given year, the market can deviate significantly from what it's done in the past).

In any case, the point is that the stock market exhibits seasonal tendencies even though there is not necessarily any good reason for it to do so. "Sell in May and go away" may be a flawed refrain, but it's not completely off the mark.

Contact Sumit Roy at [email protected].

Sumit Roy is the senior ETF analyst for, where he's worked for 12 years. Before joining the company, Roy was the managing editor and commodities analyst for Hard Assets Investor. He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing pickleball and snowboarding.