In This Article:
While the old adage "sell in May and go away" may have proved true historically, it may not pan out this year given the news-driven market volatility. Yahoo Finance Senior Reporter Allie Canal outlines what investors need to know.
Check out Yahoo Finance's interviews with Blue Chip Daily Trend Report's chief technical strategist Larry Tentarelli and Steward Partners CFP and wealth advisor Andrew Briggs, each sharing their opinion on market drivers.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
It's the seasonal adage that investors love to debate: sell in May and go away. Yahoo Finance senior reporter Alexandra Canal joining us now to break it all down for this week's investor playbook.
Yeah, sell in May and go away. It's a long-time Wall Street saying and suggests investors sell their stocks in May and sit out the summer months when markets are traditionally sluggish. But this year, some strategists are saying it might not be as simple as that. Take a listen.
I think we're in a different market this year. So I can't say that sell in May, I think historically, if we go back over the past 10 years, sell in May hasn't actually worked too well. I think this is a very high volatility news-driven cycle.
Just because it has some statistical significance doesn't mean it always works, right? So in a situation where we've had markets move up and down quite a bit, uh, it's it's questionable on whether that can be a factor.
We have had a nice recovery in April, um, you know, from that standpoint, which is great to see, but that certainly means we could retest some lows here. Um, but that's not enough evidence for us to recommend, you know, selling in May and going away, as they say.
For a bit of background here, this strategy proved effective during the early days of modern Wall Street. So think roughly 1960 to the late 1980s. But things started to shift after the market crash of 1987. It was around that time that a fully invested strategy began to outperform, and staying invested through the summer months became much more favorable. Now historically, the S&P 500 has posted its weakest average returns between May and October, just 1.8% since 1950. That compares to a much stronger November to April period. That being said, summer returns have been positive 65% of the time. So it's really that relative basis reinforcing this trade. But again, doesn't seem to hold up this year since we have everything from trade talks to monetary policy impacting markets these days. And as we just heard from those Wall Street experts, staying in the game could actually be the smarter move amid a lot of this volatility. So have to continue to wait and see, but sell in May and go away not really holding up this year.
Oh, well we'll see.
We're only on day two.
Exactly. Give us time. Exactly.
Exactly.