{"id":8026,"date":"2019-05-10T16:42:21","date_gmt":"2019-05-10T16:42:21","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8026"},"modified":"2022-02-26T13:07:19","modified_gmt":"2022-02-26T13:07:19","slug":"is-there-anything-to-the-sell-in-may-adage","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/is-there-anything-to-the-sell-in-may-adage\/","title":{"rendered":"Is there anything to the \u201cSell in May\u201d adage?"},"content":{"rendered":"\n

Bryan\nW. from Santa Fe, NM asks: <\/em>Hi there Mitch \u2013 I know the \u201cSell in May\u201d adage\nisn\u2019t a real trading strategy, but I saw some of the statistics on it over the\nweekend, and it looks to me like it actually works really well. You cite\nhistorical statistics all the time in your writing. Could you shed some\nhistorical light on this adage? <\/p>\n\n\n\n

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

Thanks for writing, Bryan,\nand I think I\u2019m familiar with some of the statistics you\u2019re referencing for\n\u201cSell in May.\u201d Like, for instance: since 1950, an investor who put $10,000 into\nthe S&P 500 from May 1 to October 31 would have $4,138 \u2013 an actual loss <\/strong>of more than half the money. <\/em>However, if that same\ninvestor had put $10,000 to work only in the remaining months, from November 1\nto April 20, they would have realized a gain of $2,836,350!1<\/sup> The\nnumbers are similar if you look at the Dow instead of the S&P 500. <\/p>\n\n\n\n

So, based on this data, \u201csell\nin May and go away\u201d seems like a pretty sure thing. But the counter argument,\nin my view, is much more compelling. That is, what is the real benefit of trading in your accounts based on a pattern\nthat has no basis in economic fundamentals?<\/strong> It\u2019s a form of market timing,\nwith transactional expenses and maybe tax consequences, which does not\nnecessarily add <\/em>to your total return\nover time, but may or may not give it a boost? <\/p>\n\n\n\n

________________________________________________________________________<\/p>\n\n\n\n

See How Market Timing Can Affect Your Retirement?<\/a><\/strong>
\u00a0
There is one big problem with market timing \u2014 study after study shows that the average investor is a poor market timer. In many cases, investors allow emotions and media noise to get the best of them, selling in and out of the market at the wrong times.<\/p>\n\n\n\n

Our guide, \u201cHow Market Timing Can Affect Your Retirement Plan2<\/sup>\u201d seeks to explain these behavioral traps and offers potential solutions. 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:
\u00a0
Download Zacks Guide, \u201cHow Market Timing Can Affect Your Retirement Plan.<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n

______________________________________________________________________________<\/p>\n\n\n\n

To me, I have a hard time\nseeing why an investor would not have just stayed in the market from 1950\nthrough today with no timing tactics. Wouldn\u2019t the total return in the account\nbe almost as good if not slightly better if the investor had simply stood\npat?    <\/p>\n\n\n\n

Studies on the \u201cSell in May\u201d pattern that dig a little\ndeeper actually do not find that summer months are negative <\/em>on average, just that they are less positive <\/em>than the November to April months.3 <\/sup>Last\ntime I checked, growth is growth! I\u2019m not sure why it would make sense for an\ninvestor to potentially miss out on further gains just because of a calendar\nquirk that only works sometimes. <\/p>\n\n\n\n

Second, markets do not really follow calendars, and I\nbelieve investors shouldn\u2019t either (unless you are making some changes for tax\npurposes at the end of a given year, perhaps). While statistics may show that\nMay\u2013August is generally a weaker period, there are also instances where it was\na relatively strong period. In my view, investors would be assuming more risk\ntrying to time the market than just focusing on a longer-term strategy and\noutlook. <\/p>\n\n\n\n

That brings me to a final point, which is economic outlook.\nIn my view, the outlook right now for the global economy and the U.S. is\npositive. At Zacks, we believe that corporate earnings are set to accelerate in\nthe coming quarter or two or three, which could give some further positive\nmomentum to stocks. Overall, we think the U.S. economy is set to grow modestly\nas it has in recent years, and that the world should follow suit. While a\nforecast for positive global GDP growth in 2019 does not ensure that stocks\nwill go up in the next three months, it does in my view make the case for\nowning equities to the extent that your investment objectives and risk\ntolerance allow for it. <\/p>\n\n\n\n

At the end of the day, in my opinion it is not worth the\ntransaction costs and potential opportunity costs associated with trying to\ntime the market over a three-month period. I\u2019d rather take the longer view, set\nmy course, and stick to it. <\/p>\n\n\n\n

But before making any big decisions, I recommend reading our\nguide, \u201cHow Market Timing Can Affect Your Retirement Plan4<\/sup>.\u201d<\/p>\n\n\n\n

This guide seeks to explain emotional and behavioral traps\nthat investors can fall prey to and offers potential solutions to common\nmistakes that many self-managed investors make.<\/p>\n\n\n\n

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

Bryan W. from Santa Fe, NM asks: Hi there Mitch \u2013 I know the \u201cSell in May\u201d adage isn\u2019t a […]<\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-8026","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8026","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=8026"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8026\/revisions"}],"predecessor-version":[{"id":10761,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8026\/revisions\/10761"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8026"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8026"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8026"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}