Is Selling in May and Going Away a Good Idea? Probably Not

The age-old adage “Sell in May and go away” is once again making the rounds as summer approaches. But is it really a wise strategy for investors to follow? While historical data may suggest lower returns during the summer months, financial advisors are cautioning against making hasty decisions based on catchy slogans.

According to Austin Marrs of TSA Wealth Management in Houston, attempting to time the market is a risky endeavor. Emotions, current events, and market trends should not dictate long-term investment strategies. Instead, investors should focus on staying in the market and not missing out on potential gains.

Historical trends show that stocks tend to perform better in the fall and winter months, with the S&P 500 index posting higher returns from November through April compared to May through October. However, staying on the sidelines during the summer months could mean missing out on positive returns, as the index has only declined twice from May through October in the past twelve years.

This year, the S&P 500 has already seen significant gains in the first few weeks of May, reaching record highs amid strong corporate earnings and hopes of interest rate cuts by the Federal Reserve. While some investors may consider limiting their exposure to the market during the summer months, historical odds may favor remaining invested this year.

Bank of America analysts advise against selling in May and going away, especially in U.S. Presidential election years. These years tend to see big summer rallies, with the index posting positive returns in June-August the majority of the time.

Ultimately, investors should be cautious of following market adages based on rhymes and catchy phrases. Patrick Huey of Victory Independent Planning in Camas, Wash., warns against making investment decisions based on simplistic sayings. Instead, investors should focus on long-term strategies and not be swayed by short-term market trends.

As the summer months approach, investors should carefully consider their investment strategies and consult with financial advisors to make informed decisions about their portfolios.