The tulips have bloomed and warmer temperatures are here,\nwhich means it\u2019s time for the \u201cSell in May and go away\u201d punditry to flood the\nfinancial news media. Don\u2019t buy into it. <\/p>\n\n\n\n
Many readers are likely familiar with the \u2018Sell in May\u2019\nadage, which says that investors should ditch stocks at the end of April, wait\non the sidelines until Halloween or some arbitrary date in the fall, and then\nreinvest in time for the Santa Claus late-year rally. But it\u2019s all just\nhocus-pocus, in my view. <\/p>\n\n\n\n
Data going back to 1925 shows that in the six months between\nMay and the end of October, the S&P 500 has gone up in 69 out of 95 years \u2013\nwhich means stocks went up 73% of the time. \u2018Sell in May\u2019 advocates still\nsomehow manage to direct focus on the 27% of down years. The broader point is\noften missed: in the 73% of up years, the average annual return is +4.3%. If\ninvestors perpetually miss this upside (even if the upside is fairly modest),\nit can have major implications on long-term returns.<\/p>\n\n\n\n
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Don\u2019t Play into the Media and Headlines \u2013 Focus on the Facts and Data!<\/a><\/strong><\/p>\n\n\n\n If the\n\u2018Sell in May\u2019 adage can teach investors anything, it is that it is more\nimportant to focus on key data points instead of trending headlines. The key to\nlong-term financial success is not to give in to short-term, hasty decisions!\nIt\u2019s better to prepare your investments for the future instead of emotionally\ninvesting based on financial news and headlines. <\/p>\n\n\n\n To help\nyou stay focused on key data points and fundamentals that could impact your\ninvestments in the long term, I am offering all readers an exclusive look at\nour May & June Stock Market Outlook Report. This report contains some of\nour key forecasts to consider such as:<\/p>\n\n\n\n If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0 __________________________________________________________________________<\/p>\n\n\n\n It is probably worth adding that the \u2018Sell in May\u2019 strategy\nhas not worked really at all in the last 10 years. The table below shows this\nclearly:<\/p>\n\n\n\n Over the Last 10 Years, \u201cSell in May\u201d Has Basically Never\nWorked2<\/sup><\/strong><\/p>\n\n\n\n To be fair, \u2018Sell in May\u2019 in the context of 2021 makes for\nan interesting case. Stocks are at all-time highs, and many would say the\nmarket is looking frothy. I tend to agree that certain areas of the market are\novervalued, which I think argues for an\nactive, research-driven approach like we do here at Zacks Investment Management<\/em>.\nBut what I don\u2019t agree with is the perception that a frothy market makes the\ncase for market timing, especially amid economic expansion. This type of\nthinking is ripe for mistake-making, in my view. <\/p>\n\n\n\n Because at the end of the day, \u2018Sell in May and Go Away\u2019 is\na market-timing strategy dressed up as a seasonal, statistics-driven investment\napproach. Most readers know how I feel about market timing, especially for\ninvestors with long-term goals of growth. As I write in my book The Little Book of Stock Market Profits<\/em>,\n\u201cOver the years I have yet to find a successful investor who obtained his or her\nreturns through market timing\u2026Active investment strategies can be developed that\noutperform the market over time \u2013 but engaging in behavior that borders on day-trading,\nbecause of what day is on the calendar, is ill-advised.\u201d The same applies\ntoday, in my view.<\/p>\n\n\n\n Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n I have seen reputable pundits and even financial\ninstitutions still leaning into the \u2018Sell in May\u2019 adage and even noticed that\nthe statistic has spilled over to Europe. One strategist noted that over the\npast 15 years, returns in Europe have been negative in June 80% of the time.\nAgain, this is all hocus pocus and cherry-picking, to me.3<\/sup><\/p>\n\n\n\n As prudent, long-term investors, we should not try to time\nthe market by season or any arbitrary date on the calendar. Stocks do not\nfollow calendars, and neither should long-term equity investors. <\/p>\n\n\n\n If you\nare uncertain about the next financial steps to take, try preparing your\ninvestments for the long-term instead of making short-term, hasty decisions!\nThis requires maintaining a diversified portfolio and sticking to key data\npoints and economic indicators that could positively impact your investments in\nthe future.<\/p>\n\n\n\n
IT\u2019S FREE.\u00a0Download the Just-Released May & June 2021 Stock Market Outlook<\/a>1<\/a><\/sup><\/strong><\/p>\n\n\n\n\n Year<\/strong>\n <\/td> \n \u201cSell in May\u201d S&P 500 Return<\/strong>\n <\/td><\/tr> \n 2011\n <\/td> \n -8.1%\n <\/td><\/tr> \n 2012\n <\/td> \n +1.0%\n <\/td><\/tr> \n 2013\n <\/td> \n +10%\n <\/td><\/tr> \n 2014\n <\/td> \n +7.1%\n <\/td><\/tr> \n 2015\n <\/td> \n -0.3%\n <\/td><\/tr> \n 2016\n <\/td> \n +2.9%\n <\/td><\/tr> \n 2017\n <\/td> \n +8.0%\n <\/td><\/tr> \n 2018\n <\/td> \n +2.4%\n <\/td><\/tr> \n 2019\n <\/td> \n +3.1%\n <\/td><\/tr> \n 2020\n <\/td> \n +12.3%\n <\/td><\/tr> \n 2021\n <\/td> \n ?\n <\/td><\/tr> \n Average\n <\/td> \n +3.8%\n <\/td><\/tr> \n % Higher\n <\/td> \n 80%\n <\/td><\/tr><\/tbody><\/table>\n\n\n\n