The saying “Sell in May and Go Away” suggests that investors should sell their stocks in May and refrain from investing again until November. The rationale is that the stock market typically underperforms in the six-month period from May to October compared to the six-month period from November to April. 

There is some truth to this idea, as historically, the period from May 1 to October 31 has been a lower return season for stocks. Since 1926, the average return for stocks during this period, referred to as “Mommies to Mummies,” has been 4.3%. In contrast, the period from November 1 to April 30, nicknamed “Turkey to Tax,” generally yields higher stock returns. On average, stocks have returned 7.4% during these six months since 1926.  

However, when we look at election years specifically, the return difference is not as significant. During election years, the “Mommies to Mummies” May to October return increases significantly to 6.3%, while the later “Turkey to Tax” November to April period drops to only 6.9%. 

For bonds, the story is similar. Typically, the period from May to October sees an average return of 2.6%, which increases marginally to 2.8% during election years. Meanwhile, the November to April period usually sees a marginal decline, from an average return of 2.5%, dipping to just 2.1% in election years. 

The data shows that, on average, stock returns are indeed lower from May to October compared to November to April. However, this strategy doesn’t account for all the market nuances, such as election year variations and individual stock performance.  

While “Sell in May and Go Away” has some historical backing and makes for an interesting concept, we wouldn’t recommend trying to time or position portfolios around the idea. For instance, during election years, the May to October period might offer better returns than usual, challenging the conventional wisdom of this adage. At CAISSA, we believe in a disciplined long-term investment focus, where factors such as your investment goals, liquidity needs, risk tolerance, and market conditions guide our decisions.  

By Ryan Zywotko, CFA, CMT

Director of Investments