# "Sell In May And Go Away"...



## Blush (Jan 9, 2014)

Is there any logic to....Why Do Investors Expect To "Sell In May And Go Away"?


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## BoringInvestor (Sep 12, 2013)

No logic.
If you're a long-term investor the mantra is: "don't delay, buy today."


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## wendi1 (Oct 2, 2013)

Stockbrokers love it. Your trading costs go way up, and that's always good for them.

If you want to be a "technical investor", though, that's a good place to start. Then you can spend your time looking for patterns in the stock price charts (a bit like looking at goat entrails).


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## Just a Guy (Mar 27, 2012)

It, like many other investment strategies, works 100% of the time...until it doesn't. 

You can always find stocks where it's true, and others where it's not.


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## andrewf (Mar 1, 2010)

I think selling your whole portfolio and buying it back every year would be very nerve-wracking. A lot of people talk about 'Sell in May and go away', but I doubt many actually do it.


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## MoreMiles (Apr 20, 2011)

Most people had 20% gain in their balanced portfolio since last May. So it's Sell in May and tax right away.


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## Moneytoo (Mar 26, 2014)

Was wondering about the origins of this saying last night, googled a bunch of explanations, liked this one:

_It's worked—briefly—for the past few years. There were selloffs in May from 2010 to 2013, but there were also global events that influenced the markets at that time. These included the debt crisis in Europe, and former Federal Reserve Chairman Ben Bernanke's announcement last year that the Fed would soon begin its tapering of debt sales.

The list of crises are as follows:

May 2010: euro/debt crisis
May 2011 Portugal/Greece crisis
May 2012: Greece exit euro fears
May 2013: Fed taper fears

My point: whatever effect "sell in May…" has had on market psychology, it has been greatly exacerbated by the unrelated series of crises we've experienced in May over the last four years._

http://www.cnbc.com/id/101623979


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## AltaRed (Jun 8, 2009)

This year there will likely be a dip due to US mid-term elections (which has generally happened....for what that is worth).


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## Homerhomer (Oct 18, 2010)

Multiple sources indicate that the period from May to October underperforms the reminder of the year, the linked chart would confirm that with May-October having an average gains of 0.5% and the periods of the year before and after in the range of 3-4% since 1950.

https://www.cxoadvisory.com/4321/calendar-effects/stock-market-performance-by-intra-year-phase/

Unverified source ;-)


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## Pluto (Sep 12, 2013)

There is some academic credence to the lower performance during summer months, but I don't rely on it at all. It isn't reliable, as las year showed. But one should not assume that all technical analysis, or historical analysis is not useful. The combining of fundamental analysis an d technical stuff by William O'Neil, for example, is credible.


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## Blush (Jan 9, 2014)

LOL...too funny!


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## Ihatetaxes (May 5, 2010)

Sold a whack of XIU today in registered accounts since I want to move to XIC for the added mid and small caps and lower fee but I might wait a while before making those buys. Market timing? I guess so. At least I can pretend I have an excuse. Sure nice to see XIU over $21 today.


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## cjk2 (Sep 19, 2012)

Homerhomer said:


> Multiple sources indicate that the period from May to October underperforms the reminder of the year, the linked chart would confirm that with May-October having an average gains of 0.5% and the periods of the year before and after in the range of 3-4% since 1950.


So...on average, if you stay in the market the whole year you get gains of 3-4% plus 0.5%. If you "sell in May and go away" you only get gains of 3-4% (losing out on that extra 0.5%). Am I missing something here that makes this a good idea?

(Not trying to be facetious--I don't read much about market timing strategies so I'm genuinely curious what makes "sell in May" so popular? When based on the data mentioned above, I don't get how it leads to higher returns.)


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## liquidfinance (Jan 28, 2011)

If the individual stock fundamental remain sound they I see no reason to sell. I would look to add to positions on any dip though. 

Yes it will work some of the time. Think herd mentality.


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## Just a Guy (Mar 27, 2012)

cjk2 said:


> So...on average, if you stay in the market the whole year you get gains of 3-4% plus 0.5%. If you "sell in May and go away" you only get gains of 3-4% (losing out on that extra 0.5%). Am I missing something here that makes this a good idea?
> 
> (Not trying to be facetious--I don't read much about market timing strategies so I'm genuinely curious what makes "sell in May" so popular? When based on the data mentioned above, I don't get how it leads to higher returns.)


Actually, you would trigger a capital gain, so your earning capital would be lower when you go to reinvest in October, which would in turn lower your overall returns.


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## Moneytoo (Mar 26, 2014)

Looks like should've sold my TD Index Funds today - and repurchased Index ETFs in May


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## Homerhomer (Oct 18, 2010)

cjk2 said:


> So...on average, if you stay in the market the whole year you get gains of 3-4% plus 0.5%. If you "sell in May and go away" you only get gains of 3-4% (losing out on that extra 0.5%). Am I missing something here that makes this a good idea?
> 
> .)


Just to clarify I never said it was a good idea, I just brought it up to illustrate that period from May to October on average underperforms the rest of the year. With that in mind your calculation doesn't seem to work, I believe the chart is divided into three periods, with each of the two other periods experiencing gain of 3-4%, so if you add them up it would be more like 6-8%.

And you are loosing dividends you could have made from May to Oct.


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## cjk2 (Sep 19, 2012)

Homerhomer said:


> Just to clarify I never said it was a good idea, I just brought it up to illustrate that period from May to October on average underperforms the rest of the year. With that in mind your calculation doesn't seem to work, I believe the chart is divided into three periods, with each of the two other periods experiencing gain of 3-4%, so if you add them up it would be more like 6-8%.
> 
> And you are loosing dividends you could have made from May to Oct.


Oh, I realize the consensus here is that "sell in May" is not actually a good idea. I just wondered why this saying became so popular, when it seems that the data doesn't even support it. With your 6-8% correction: if you hold throughout the year, your returns (on average) are 6-8% + 0.5%. If you "sell in May", your returns are 6-8%, minus May-Oct dividends, minus capital gains taxes (as Just a Guy pointed out). So even though you get lower gains, on average, from May-Oct compared to the rest of the year, you're still getting _something_. Seems like a bad idea to miss out on that.


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## Rusty O'Toole (Feb 1, 2012)

This is an old saying that dates back to the days of Jesse Livermore and similar big speculators. June through September are usually dull times for swing traders, short term traders and day traders. Not much money to be made, and a larger chance of loss.

Therefore, you might as well take the summer off.

If you look at the charts of the S&P, Dow etc this is still true most years.

This does not apply to investors just traders.


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## cjk2 (Sep 19, 2012)

Rusty O'Toole said:


> This does not apply to investors just traders.


Ah, I see, that makes sense then.


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## Rusty O'Toole (Feb 1, 2012)

Or as Jesse Livermore put it "in a market like this not even a skunk can make a cent". (scent)


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## favelle75 (Feb 6, 2013)

So tough to sell right now. Everything I own except Cameco is on a tear. Plus all the juicy dividends? No thanks. I'd rather just buy more on the dip, if it ever happens.


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## Rusty O'Toole (Feb 1, 2012)

Here is a long article analyzing this saying. They give it as "Sell in May and go away, come back after St. Leger's day"

http://streettalklive.com/index.php/analysis/daily-x-change.html?id=2198


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## amitdi (May 31, 2012)

Past data does not tell anything about future and as someone said, things work until they dont. Also, I dont recommend using this strategy. Now, that I have got rid of disclaimers...

However, past data does justify "Sell in May & Go Away". The below table is just the summary I have in my notes from the book "Investing on Autopilot" by Robert Cable. Dont use this out of the blue but the point I want to make is - the statement holds some water based on data. Will it continue to be true is anyone's guess.



MarketPeriodMay-Oct ReturnNov-Apr ReturnDJIA - flat market period1966-79-4.9%5.1%DJIA - bull market period1981-99 2.7%11.9%Canada - (TSX)1956-06-0.2%9.9%


On a related note, the book has has some other rules based theories - one of which I am using currently. This one is more intuitive based on PE, PS, relative strength, etc. So I am more comfortable using it.


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## Moneytoo (Mar 26, 2014)

Selling my e-series TD Index Funds (sold Canadian one last Thursday, US and International - today) with the plan to purchase ETFs/individual stocks at more reasonable prices (between now and October )


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## pastorash (Feb 3, 2014)

amitdi said:


> MarketPeriodMay-Oct ReturnNov-Apr ReturnDJIA - flat market period1966-79-4.9%5.1%DJIA - bull market period1981-99 2.7%11.9%Canada - (TSX)1956-06-0.2%9.9%


I wonder what the long term effect of increasing mobile trading (and increasing trading in general perhaps) will have on this chart, may be very interesting to say the least.


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## Causalien (Apr 4, 2009)

I have to put the sell in May mantra as a myth. Then again, my view is biased due to my own experience.

I think The mantra works because in April people have to sell to pay for income taxes, then in May, sell again for property tax. So the selling pressure from retail investors are larger than usual and the favorite stocks of retail investors suffer the most.

In the past two years, the April-May period represented two of my biggest gains in life. I saw a doubling of my total portfolio last year in this period. Of course, the stocks I picked were shunned by most retail investors, so I did not suffer from the May day effect.

Every mantra have worked at some period in time. It is important to understand why and if it suits your investing style.


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## Rusty O'Toole (Feb 1, 2012)

If you sold in May you would be happy today. Dow and Russell at levels last seen in April.

http://www.zerohedge.com/news/2014-08-01/sell-may-worked-after-all


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## bgc_fan (Apr 5, 2009)

Well, the TSX is up 4.55% since May. Is that not a good return?


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