Old adages within the investment industry are plentiful. They are often catchy phrases that are easy to remember. Surely, there are some adages passed on that appear to stand the test of time including: “it’s about time in the market, not timing the markets” and “a rising tide lifts all boats”.

With that said, we question whether it is wise to form an investment framework based on mottos and slogans. We are most suspicious of those that suggests a rule for short term patterns and market timing. One such saying is, “Sell in May, Go Away”. This has been used as a quasi-almanac for some investors, who point to the historical data that stocks tend perform better November through April.

Those tempted to “Sell in May” may be surprised to find out that in the past 40 years, May has been a rewarding month to be invested. Since 1985, the month of May has provided positive returns 77% of the time. Both the average and median positive performance sits at +1.2%. When only looking at non-bear market periods, the historical data shows that May is positive almost 80% of the time with average and median returns of 1.3% and 1.5% respectively. The chart below summarizes the data.

This is not to say that there have not been months in May that were negative and memorable. May of 2019 saw a -6.6% drop in the S&P500 amidst COVID tensions. May of 2012 say a -6.3% drop over concerns of a eurozone debt crisis and slowing US economy. However, overall, the experience of being invested between May to the end of the year has been positive 72% of the time in the last 40 years and 82% of the time for non-bear market years.

We are weary of investors changing their strategies to avoid losses over specific months or seasons. Afterall, seasonal downturns and anomalies may or may not occur in a given year. Changing one’s investment mix would be better served only when your current strategy or time horizon is no longer suitable. If the status of one’s circumstances remains constant, we would recommend sticking with the process of long term compounding and speaking with your advisor to review and understand the risks that the portfolio is exposed to.