Sell In May And Go Away Is Very Bad Advice Based On Data

Our Research Using 40 Years of S&P 500 Data I Will Prove To You That Sell in May and Go Away is Terrible Advice You Should Avoid At All Costs.

There is a saying in the Stock Market, “Sell in May and Go Away.” But is there any truth to it?

What Does Sell in May and Go Away Mean?

Sell in May and Go Away refers to the fact that the summer months from May to September tend to see much lower stock market returns than the winter months from October through to April. It is a simple maxim to remind you that bad months in the stock market are coming.

Should You “Sell in May and Go Away”?

No, you should not “Sell in May and Go Away.” Based on our research, every year is different; you cannot dissolve your portfolio of stocks and ETFs based on the fact there is an outdated stock market maxim. Very few people actually follow this advice because the market would crash every year in May if they did.

In fact, the Best time to buy stocks is at the start of April.

60 Years of Sell in May and Go Away Research

“We see that over the last 60 years, the best months to be in the market were January, March, April, July, October, November, and December, those months having each attained on average of 0.5% or greater gain. 

This is an average, and there are, of course, years where these months will bring negative returns.  An excerpt from the Liberated Stock Trader PRO Books and Training Course.

Sell in May and Go Away Chart: 30 Years of Data

Sell in May and Go Away Chart: S&P 500 Monthly Returns 1980 to 2010 – This Image is Copyright Liberated Stock Trader Book 2011 – All Rights Reserved

Sell in May and Go Away Analysis: 2000 to 2020

From the data, we can clearly see from the data that over the last 20-year to 2020, April has been the best performing month on the S&P 500 index with a 2.4% average gain. Additionally, June, July, August, and September have suffered on average losses of 0.6%. If you do Sell in May and Go Away, you will want to buy again at the start of October because October and November record an average of 1.12% gains.

MonthAverage of % Change
Jan-0.28%
Feb-0.65%
Mar0.83%
Apr2.40%
May0.30%
Jun-0.50%
Jul0.90%
Aug-0.28%
Sep-0.83%
Oct1.17%
Nov1.08%
Dec0.50%
Grand Total0.39%

 

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40 Years of Sell in May and Go Away Analysis

Over the last 40 years from 1980 to 2020, the best months to buy stock have been April +1.97%, October +1.13%, November +1.55% & December +1.22%

MonthAverage of % Change
Jan1.07%
Feb0.20%
Mar0.70%
Apr1.97%
May0.96%
Jun0.28%
Jul0.91%
Aug-0.08%
Sep-0.52%
Oct1.13%
Nov1.55%
Dec1.22%

The Best Months to Sell Stocks

If you are thinking about selling stocks, the best time to sell would be toward the end of August, as September is typically the worst month for stock market declines. September averaged a -0.52% loss over the last 40 years.

Summary

The single best month to buy stock over the last 40 years and in every decade has been April.

According to our 40 years of data, from 1980 to 2020, the best month to sell is September.

Interested in the best days of the week to trade?  Interested in the four-year business cycle and when the worst years to invest are and when the best years are?  In the Liberated Stock Trader Book, I show with an 86% probability that the 4-year business cycle is real and also when it is set to strike next.

Related Articles: Finding Great Stocks With Stock Rover

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