Sell in May and go away – and then what?

The age old Wall Street adage “sell in May and go away” is one of many captions that work, until they don’t.  It suggests selling all of your stocks on May 1st and staying out of the market until November 1st.  This somewhat outdated superstition can be tracked back to the early 20th century when trading volume was significantly impacted by the extended summer vacation season of Wall Street traders.

The track record of the “sell in May and go away” adage has been mixed over the years. While the stock market has historically performed poorly during the summer months “going away” has only worked twice since the great financial crisis in 2008. In fact you would have only benefited once between 2010 and 2020.  In every other year of that decade, by staying invested from May through October you would have outperformed the market according to

-and then what?

It’s the economy, what else??  Are we experiencing inflation or are we in a recession?  The truth is it depends on who you ask.  An economist will answer, without qualification that we are in an inflationary episode. Yet most people I ask tell me they think we are in a recession.  The relationship between inflation and recession is complex because it is more than looking at data, its often about how we feel. In some cases high inflation can lead to a recession if it becomes uncontrollable, and erodes confidence in the economy.  It comes down to a matter of personal perspective.  When your neighbors lose their home it is a recession.  When you lose yours it’s a depression.

The good news

We have established that you do not have to “sell in May and go away”. If you have a plan, stick with it. This is not to say we don’t have financial challenges ahead.  We do, but we are not likely to have both inflation and a recession at the same time. Raising interest rates to combat inflation can lead to a recession if they are increase so much that the purchasing power of everyday American families erodes.  By historical standards, rates are much lower than they were in 1980. The high interest rates lead to a severe recession from 1980 to 1982.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All performance referenced is historical and is no guarantee of future results.

All indices are unmanaged and may not be invested into directly.

Investing involves risk including loss of principal.

No strategy assures success or protects against loss.

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