Sell in May? Pfft!
I'm not big into old market sayings. If you've been around the markets as long as I have, then you know what these are.
In my more than 20 years in the business, I have heard them all - from religious notions like the 'Santa Claus Rally', to 'sell Rosh Hashanah, buy Yom Kippur.'
There are calendar adages as well, like 'as January goes, so goes the year,' and the 'summer rally,' or 'the bears will have Thanksgiving and the bulls will have Christmas.'
There is one more out there and we are upon it - 'sell in May and go away.'
This one really freaks everyone out because there is some factual data to support this action!
However, it's about as reliable as the Super Bowl indicator, which since 2000 has predicted the market right 12 times and wrong the other seven times.
I need better odds than that to use it as an indicator.
The sell in May concept tells us the worst six months of the year are upon us. That makes sense, especially in a year where the markets are rocketing higher from the start, like in 2019.
Yet, if you're like me and believe in trends, patterns and momentum, you may not be so quick to sell everything and wait on the sidelines.
The track record of the old 'sell in May' market adage has been dismal, though.
The sell in May time frame is from May 1 through October 31. The theory is to miss the poor months of August through October, which have often been the worst three month stretches of the year.
Now maybe if you followed this advice over a long period of time, a sell in May strategy might have yielded some gains or prevented losses.
Yet if you sold stocks in May in the last few years, you would have wound up buying them back - at higher prices - in the fall.
Like anything, it's a crap shoot. If the market momentum is still strong, then why fight it? If you have some gains and want to take some chips off the table, then by all means - do that.
Nobody ever went broke taking a profit. But to exit entirely because of some old market saying?
Well, some will do it anyway, and for that very reason. However, I suggest you listen and watch the market action before making such a drastic move.
Because if you don't and you go ahead and sell in May, you might find yourself fighting an uphill battle when you return.