Why You Shouldn't "Sell in May and Go Away"
Why Use an Investing Strategy Based on a Horse Race?
“Sell in May and go away” is one of the oldest stock market adages still making the rounds. But before you act on it, it’s worth asking—does this strategy really hold up?
Let’s take a look at its quirky origins, historical context, and why it may not be the smartest move for today’s investors.
Where Did It Come From?
While popular on Wall Street, the phrase actually originated in London’s financial district. The original saying?
“Sell in May and go away, come back on St. Leger’s Day.”
St. Leger’s Day refers to one of Britain’s oldest horse races, held each September. Historically, London traders would sell off stocks in May, enjoy a summer break (including the race), and re-enter the market in the fall. The strategy was based on the belief that markets performed better from November through April than they did from May through October.
The Historical Case
According to the Stock Trader’s Almanac, since 1945, the S&P 500 has returned an average of 6.7% from November to April, compared to just 2% from May to October. It also posted losses only 13% of the time during November–April, versus 33% during May–October.
From a 75-year perspective, the numbers support the idea that the market has historically been stronger during winter and spring months.
But What About More Recent Years?
Past averages don’t always translate to current reality. Let’s look at just the last few years:
2020–2021: From November 1 to April 30, the S&P 500 gained 27%. If you had sold in May 2020 and waited until November to buy back in, you missed a 13.97% gain.
2019–2020: The S&P 500 actually lost about 5% from November 2019 to April 2020.
2018–2019: If you followed the strategy, you would’ve missed out on a 2.6% return.
As you can see, the pattern isn’t consistent. Timing the market—especially based on seasonal trends—is a risky proposition.
“It’s Different This Time” — Or Is It?
One of the most dangerous investing mindsets is believing “this time is different.” History reminds us time and again that while conditions change, the fundamentals of investing remain remarkably steady.
The point is: no matter how tempting it is to rely on old adages, market timing strategies based on seasonal averages rarely account for actual economic or market conditions.
The Risks of Selling in May
Even if historical averages make the idea appealing, there are several downsides:
You could miss out on gains in years when summer months outperform expectations.
Short-term gains may be taxed at higher rates, cutting into your returns.
Transaction fees can stack up from frequent buying and selling.
You may end up reacting emotionally rather than sticking to a sound, long-term strategy.
What Should You Do Instead?
Rather than relying on outdated rhymes and seasonal speculation, focus on time-tested strategies like:
Assessing current economic trends and business cycles
Staying diversified
Keeping your investments aligned with your long-term financial goals
A buy-and-hold strategy built around careful planning is far more effective than chasing calendar-based returns.
Work with a Trusted Advisor
At NEST Financial, we’re here to help you craft an investment strategy rooted in real-world insights—not horse race traditions. Our financial advisors are committed to helping you make confident, informed decisions for your future.
Contact us at info@nestfinancial.net to set up a no-pressure introductory meeting.