“‘Sell in May and go away”, a phrase most investors know well. I was recently discussing this with a partner, and what began as a casual remark quickly turned into a proper exchange on whether markets genuinely slow down over the summer or if investors simply like the idea of having an excuse to do less.
“Sell in May and go away” suggests that the market often underperforms during the May to October period, while the stronger performance tends to come from November to April. Part of this may be driven by belief in the adage itself, prompting investors to trim positions and, in doing so, reinforcing the pattern. It may also reflect lighter market participation, as trading desks quiet down and some professionals trade screens for summer holidays.
Depending on which index you track and how far back you go, the “sell in May” strategy is a bit like a coin toss with a PhD. Some years it looks brilliant, other years you have politely stepped aside while the market keeps climbing without you.
She argued that given the current backdrop, geopolitical tensions, elevated oil prices, and upcoming mid-term elections, it may not be unreasonable to see investors adopting a more cautious stance even ahead of May or perhaps the market is simply getting ready to leave a little earlier this year.
On the other hand, if we do see further de-escalation in the Middle East region and the easing of supply chain problems, the market could be set for a strong rally over the summer.
In my years in this business, I have learned that seasonal patterns like “Sell in May and go away” can offer useful context but rather than anchoring to a calendar, the real edge lies in staying flexible and adapting to whatever comes next.