Financial abundance

Sell in May and go away.

If may starts you probably will hear the phrase sell in May and go away, when you invest in the stock market. But where does this phrase come from and does it make sense?

History of the sell in May.

Historically the period between May and November are months that investment produce less gains than the period before may.  This has to do with a historic phenomenon. Back in the day rich people or the so-called aristocrats would leave the big cities during the hot summer months and would spend their time on the countryside. The market would slow pace and to avoid risk when you were on the countryside you would just sell and return when you were back in the city.

Sell in May, when you have broadband internet on your phone?!?

In modern times we are used to have access to are stock portfolio almost anywhere in the world. But still, it seems an old ritual that comes back every year. Especially this may where red seems to be the color of the first halve of May 2021. In any market that expands in is just normal that there is a drop or the so-called taking profit.

Buy the dip or wait for a bit?!

Interesting here is should you wait for November to return or buy the dip now? Only time can tell you. But look back at the period between 2010 and 2019 we see mix signals. If you take the S&P 500 you could have lost up to -8,1% one year to gain 10% the next year. But looking at all year’s most years have an increase between May and October. So selling in May means you miss on some gains in the market and might even miss a nice +10%.

Sell in May or Just stay?

To conclude I prefer to stay, yes, a market correction isn’t a nice thing it hurts to see your gains drop an drop with no clue when it stops. But you don’t know what will happen next it might come back, and you miss out on the wild ride up standing on the sideline. Like Tony shows in his book Unshakable if you miss the top days because you were out of the market you barley get any gains that year at all.