Sell in May? Or let your strategies show the way?

By David Wismer

Wall Street has produced many time-honored expressions. Most contain at least a grain of truth—and sometimes much more. But when it comes to investing, even the most useful market sayings are not a substitute for a disciplined strategy.

Consider a few of the classics:

“Don’t fight the Fed.”

 “The trend is your friend.”

“Buy the rumor, sell the news.”

“Never catch a falling knife”—and the related thought, “Markets climb a wall of worry.”

Now that the calendar has turned to a new month, it seems timely to examine one of the more famous sayings: “Sell in May and go away.”

This financial adage suggests that investors sell stocks in late April or early May and re-enter the market in November to avoid the historically weaker six-month period from May through October.

According to many sources, the concept originated in London’s financial markets. Barron’s notes,

“The phrase dates back to 18th century London, when months-long vacations were the norm for the financial elite–and no one else. (An alternative version of the saying is ‘sell in May and go away, and come back on St. Leger’s Day,’ referring to a horse race historically held in mid-September.)”

Regarding its adoption in the U.S., Investopedia writes,

“The Stock Trader’s Almanac popularized the idea of the historical pattern, which found that investing in stocks as represented by the Dow Jones Industrial Average from November to April (we’ll discuss this as the ‘winter’ period) and switching to fixed-income investments the other six months (the ‘summer’) would have ‘produced reliable returns with reduced risk since 1950.’”

What does the data suggest about “Sell in May”?

As with any review of historical data, the conclusions depend on the time frame and criteria used in the analysis. For example, some reviews of the “Sell in May” thesis start in 1928, while others begin in 1950 or 1990. A few also exclude years with statistically significant outliers in monthly returns.

Let’s start with the simplest view: average monthly returns since 1950.

You don’t have to add up the numbers to see a significant advantage for the six-month period from November through April. Investopedia points out that since 1990, “the S&P 500 has averaged a return of about 3% annually from May to October versus about 6.3% from November to April.”

The most obvious question might be, “Why not include October for a seven-month stretch of historically stronger returns?”

Aside from the symmetry of having two six-month periods, I think the answer lies in October’s history. It is not only the highest-volatility month on average, but it is also a time of year many traders associate with several of the market’s worst drawdowns, including those in 1929, 1987, and September/October 2008.

An analysis from AthenaInvest provides an interesting risk-adjusted answer to the question, “What are the best months to invest?” It considers both the monthly returns and volatility shown above.

The following chart ranks the months of the year using a score that combines the highest maximum, minimum, and average returns with the lowest standard deviation. The bars show the absolute range of minimum to maximum monthly returns, while the line shows average monthly return.

When ranked this way, says Athena, “April is the most attractive month to invest, while September is the worst. January, usually considered one of the best months to invest because of new-year inflows, is actually in the middle of the pack. November is usually viewed as wild due to election-based market fluctuations, but in reality, it is a great month for investing. September is the only month with a negative average return.”

What are we to make of this?

After reviewing many examinations of the “Sell in May” theory, I think a team of Deutsche Bank analysts, cited by Barron’s, summed it up most simply and effectively:

“Overall, the sell in May strategy beat the market in only 22 out of 53 years [since 1973] … and more recently, adherents would have missed out: In 2025, U.S. equities gained 14% from May through September, while U.S. [Treasuries] returned only 3%. … The ‘sell in May’ strategy offers no greater certainty of success than flipping a coin.”

Strategist Charlie Bilello adds,

“While lower than the November-April 6-month period, the S&P 500’s total returns from May-October are still positive on average (+6.6% annualized) with stocks higher 72% of the time.

“Not exactly something you would want to ‘go away’ from.”

Strategies should seek to improve the probabilities for success—no matter the time of year

A few of Flexible Plan Investments’ (FPI’s) many strategies incorporate seasonality as a factor that helps inform positioning. The most notable example is the QFC Political Seasonality Index strategy (found under Domestic Tactical Equity), which uses daily changes in the Dow Jones Industrial Average, along with political and seasonal factors, to help determine the strategy’s buy and sell signals.

However, most FPI strategies look for opportunities regardless of market seasonality. These rules-based strategies use a variety of price and momentum technical indicators as their foundation, with different performance criteria and objectives.

The broad mission is to help financial advisers guide their investor clients with diversified, risk-managed portfolios designed to adapt to shifting markets. The goal is to capture as much upside as possible while mitigating volatility and downside exposure in difficult market environments.

An important way FPI helps advisers select appropriate strategies for each client’s portfolio is through the firm’s proprietary market-regime indicator, a tool designed to help advisers identify the current market state (e.g., bull, bear, or sideways). FPI’s Crash Test Analyzer then allows advisers to simulate how selected portfolio strategies may react in different market scenarios, highlighting potential risks and outcomes in advance and facilitating the selection of the historically best-performing strategies for each specific environment.

While “Sell in May” might be an interesting theoretical construct, FPI’s investment philosophy focuses more on the ever-changing current market environment than static historical data. That emphasis helps drive FPI’s investment philosophy far beyond a passive, nonadaptive approach.