Sell in May?

BarroMetrics Views: Sell in May?

“Sell in May, and go  away” (at least for US stocks). How true is the adage?

Well, it depends on the time window under observation.

If we look at a time window since 1950 or for the past 50 years, it appears true enough. In the May to October window, we see the DJIA returning only 0.3% and the S&P, .91%.

But, if we look deeper, we see that the picture is not that clear:

  • From 1964 to 1988, the returns accord with the 50-year results.
  • From 1989 to 2013, we see an upward bias from around May 5 to month’s end.
  • We also see an average return of 1.3% for the period.
  • But if we strip out the 1989-1993 period, and look at 1994 to 2013, we see the start of a return to the bearish bias – with a sell-off into the May 16-18 time window, followed by a rally to month’s end.
  • The average return is -0.25% return.

I’ll rely on the more recent pattern (1994 to 2013); and with tapering set to continue, I expect we’ll see the May decline of yesteryear return.

2 thoughts on “Sell in May?”

  1. hi Ray,
    How about selling the dogs during
    1. Fund window dressing periods
    2. Index component stocks reviewing periods?

    Cheers!

    Paul

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