Quite often, this has proved a good strategy. Historically, May to October has not been very good for stocks. Since 1950, the S&P’s average monthly gain for May is just 0.2 percent, flat for June and a 1 percent gain in July with slight losses in August and September.
However, there is one stat that often goes unnoticed. Since 1950, May has been a good month for the S&P 500.
In my 33 years in this business, I have noticed one thing: that it works best when no one thinks it will or when it gets little to no attention at all. This leads to a different stock market adage that always does hold true: “If it’s obvious, it’s obviously wrong!”.
What I’m trying to say here is that when people think it’s obvious that the sell in May phenomenon will work, it doesn’t and vice versa.
I have been hearing a lot of chatter about sell in May, which leads me to believe that it might not be good to be out of the market during this time. I would feel more confident in making this judgement call if May turns out to be good for stocks.
Most importantly, of course, is that you build your master plan to make money in any market so you get the best returns with the least risk possible. Or as I like to say, “Invest for need, not for greed”.
Feel free to contact me with any comments or questions