{"id":13149,"date":"2024-05-08T17:48:07","date_gmt":"2024-05-08T17:48:07","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13149"},"modified":"2024-05-08T17:48:08","modified_gmt":"2024-05-08T17:48:08","slug":"sell-in-may-and-go-away","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/sell-in-may-and-go-away\/","title":{"rendered":"Sell In May And Go Away?"},"content":{"rendered":"\n

Charlie N. from Norman, OK asks:<\/em> Dear Mitch, I know that the \u201csell in May and go away\u201d strategy probably doesn\u2019t work all the time. But in an election year, wouldn\u2019t you agree that there could be a lot of volatility in the run-up months, which would make selling in May a more viable strategy? Thanks for your thoughts.<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for writing, Charlie. I\u2019m going to split your question into two parts, first addressing the \u201csell in May and go away\u201d adage and then addressing volatility in the lead-up to a U.S. presidential election.<\/p>\n\n\n\n

I came across some data recently that seemed to confirm the \u2018sell in May\u2019 adage. A study looked at large-cap stocks from 1950 to 2000 and found that the months outside the May \u2013 October period delivered annualized returns of 19.62% with average volatility of 12.44%. During the summer months, however, annualized returns fell to 6.72% with higher volatility \u2013 14.14%. In short, substantially lower annualized returns with higher risk.1<\/sup><\/p>\n\n\n\n

Looking to Sell? Take a Look at Our Free Guide First!<\/a><\/span><\/strong><\/p>\n\n\n\n

Instead of falling into the trap of emotionally buying \u201cat just the right time\u201d or selling stocks during uncertain times, I\u2019m offering our guide, \u201cHow Market Timing Can Affect Your Retirement Plan2<\/sup><\/a><\/em><\/span><\/strong>\u201d. This guide explores behavioral traps and offers potential solutions to common mistakes that many self-managed investors make.<\/p>\n\n\n\n

If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, click on the link below to get your free copy:<\/p>\n\n\n\n

Download Zacks Guide, \u201cHow Market Timing Can Affect Your Retirement Plan.\u201d2<\/sup><\/a><\/span><\/strong><\/p>\n\n\n\n

Looking at those same large-cap returns more recently, in the 2000 to 2023 timeframe, the adage holds up but not as compellingly as before \u2013 and with more risk. The annualized return outside of the May \u2013 October timeframe was 13.29% with 17.50% volatility, compared to an 8.64% return during the summer months with 14.31% volatility. In short, the returns were still better for large-cap stocks outside of the May \u2013 October period, but volatility has been higher more recently.<\/p>\n\n\n\n

The \u201csell in May\u201d adage seems to be focused on the first data set when returns are substantially lower during the summer months with significantly greater risk. But what\u2019s often missing from all \u201csell in May\u201d commentary is that returns are still positive<\/em> in the May \u2013 October period. While I understand that history suggests the risk\/return dynamics are not as attractive in the summer months, there\u2019s not a compelling case here to abandon a long-term strategy in favor of market timing.<\/p>\n\n\n\n

What\u2019s more, if we look back at S&P 500 returns in each calendar month going back to 1926, we find that stock market returns over the 6-month summer stretch (rolling) have been positive in 71 out of those 98 years, or 72.4% of the time. May has been positive 64% of the time, and July has historically been the year\u2019s strongest month. I want to reiterate my earlier point that markets don\u2019t run on calendars. Compelling probabilities of success simply aren\u2019t there, in my view, and are certainly not strong enough to warrant short-term timing decisions for investors pursuing long-term outcomes.<\/p>\n\n\n\n

When emotions are running high, focusing on the long-term view and sticking to your course is best.<\/p>\n\n\n\n

Instead of making decisions the \u201csell in May\u201d adage, I recommend taking an exclusive look at our guide, How Market Timing Can Affect Your Retirement Plan3<\/sup><\/a><\/em><\/span><\/strong>, which explores behavioral traps and offers potential solutions to common mistakes, like trying to time the market, that many investors make.<\/p>\n\n\n\n

If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, get your free copy by clicking on the link below.<\/p>\n","protected":false},"excerpt":{"rendered":"

Given the looming potential for volatility this year, should investors earnestly weigh the wisdom of this adage? Mitch shares his insights on the matter.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-13149","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13149","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13149"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13149\/revisions"}],"predecessor-version":[{"id":13151,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13149\/revisions\/13151"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}