By Larry Swedroe
One of the more persistent investment myths is that it is a winning strategy to sell stocks in May and then wait to buy back into the market around November. The oft-repeated catch phrase is, “Sell in May and go away.”
Well, this year if you sold your stocks in May, you would probably have lost out on some nice gains. The S&P 500 rose from 1883.68 to 1923.57 last month, an increase of 2.1 percent. And that doesn’t include the impact of any dividends.
Of course, the real test of the sell in May theory requires five more months. I ran some numbers looking at returns from May through October in recent years.
I found that while it is true that stocks have provided greater returns from November through April than they have from May through October, since 1926 it has still been advantageous to stay invested in stocks from May through October. In other words, selling in May and going away hasn’t been a good strategy. Read more