Sell In May and Go Away

As per the Sell In May and Go Away definition, it is an important phrase in the Financial Sector. It is known to be based on the overall historical underperformance of some specific stocks during the “summery” 6-month period that tends to commence from May and ends in October. This is in comparison to the “wintery” 6-month period that is known to commence from November and extends till April. When an investor goes forward with following the given strategy, he or she would release the respective equity holdings during May (during later spring), and consider Investing again during November (mid-autumn).

Some of the investors are going to find the given strategy highly rewarding in comparison staying in the respective equity markets across the entire year. The investors would go with the assumption that, during the setting in of the warm weather, the overall lack of participants in the Market and low volumes could make it somewhat riskier, or lead to the creation of a minimal market period that lacks the overall luster.

Origin of Sell In May and Go Away

The given phrase is known to have originated from a traditional English saying –“ Sell In May and Go Away, and come back on St. Leger’s Day.” The given phrase indicates a custom of merchants, aristocrats, and bankers who were known to leave London while escaping into the country during the months of the summer season. St. Leger’s Day also goes by the name as St. Leger’s Stakes. It was a famous thorough-bred horse race that was organized during mid-September and the British Triple Crown’s last Leg.

American investors and traders who preferred spending more time on a vacation between the period of Memorial Day & Labor Day are known to copy the given trend while adopting the phrase to serve as the investing adage. Moreover, for over half a century, the respective stock market patterns have been in support of the theory behind the given strategy.

Alternatives to Sell In May and Go Away

Rather than selling during May and then going away, there are some analysts that recommend rotation as well. The given strategy implies that the investors will not be cashing out the respective investments. Rather, they would be varying the respective portfolios while focusing on products that might be minimally affected by the slow growth of the season in the existing markets during early autumn and summer –like health or technology.

Indeed, for most of the investors out there having long-term goals, the buy-and-hold strategy –holding onto the equities throughout the year, for several years, until there happens some change in the respective fundamentals –serves to be the best course.