Over the years, many adages like “A penny saved is a penny earned” and “Save for a rainy day” have found their place in the financial dictionary. Although most of these phrases sound like general life advice, there is one proverb, however, that has proven its practical application times and times again. “Sell in May and go away” is a phrase that almost every market participant had heard, while a majority have even adopted it as a pillar of their investment strategies.

All you should know about the “sell in May and go away” strategy

“Sell in May and go away”, also known as the “Halloween Indicator” is a financial proverb based on the underperformance of stock prices and the decreasing stock market returns in the six months between May and October each year. The phrase is also used to make a theoretical distinction between two periods of the year – the summer period (May – October) and the winter period (November – April).

The whole meaning of the famous adage is to sell the equities in your portfolio in May and buy them (or others) again in November. Historically, such a strategy has proven to be more efficient for many investors than merely staying in the stock market.

The philosophy behind the investment strategy is that during the summer, a big part of the investors is less active – they generate lower trading volumes, go on vacations, switch to other asset classes, and so on.


The phrase we use today is a shorter version of the English proverb “Sell in May and go away, and come back on St. Ledger’s Day.” Centuries ago, British people were using the phrase to refer to bankers, merchants, aristocrats, and wealthy individuals who could afford a house in the country. At the end of May, the majority of these people used to leave the busy London and go to the country to spend the hot summer days and relax.

St. Ledger’s Day is named after a horse race that was usually held in the middle of September. Those who have left the city came back on time to watch it, as well as to settle before the cold winter months.

Since the majority of the US investors are going on vacation between Memorial Day and Labor Day in that period, over the years, they adopted the phrase as a way to enhance their investment strategies and improve their stock market returns.

Does it really work?

The concept of selling in May and buying again in November is based on estimations proving that the stock market returns worldwide for the given period are near zero or even negative. This basically puts the “sell in May and go away” saying in direct opposition with the efficient-markets hypothesis.

Like every other thing, the Halloween Indicator has its fans and critiques. What data has proven, however, is that, historically, the effect has been observed in the most developed stock markets, including the US, Japan, the UK, some EU countries, Canada, and more.

Let’s take a look at the market data. When it comes to the S&P 500, the “Sell in May and go away” strategy has proven relatively successful. Below is some data revealing the returns of the stock index for the period 2010 – 2019:

In the case of the Dow Jones Industrial Average (DJIA), from 1950 to 2013, the index has been recording lower returns in the summer months, compared to the winter period. Since 2013, though, the effect has been weakening.

Where is it applied?

The strategy is applied in the stock market (S&P 500, DJIA, etc.). However, it is worth noting that it isn’t a universal solution that works for all portfolios out there.

Investors who focus on stocks that have seasonality factors influencing their prices don’t adhere to the strategy as it may negatively affect their profit opportunities. For example, stocks of companies like Booking.com or Airbnb have an increased number of users of their services in the late spring to early autumn periods. Selling them in May may result in losing a potentially positive stock performance during the summer months.

The case is the same for the stocks of the leading airline companies. Due to the growing number of travellers during the observed period, the airline operators’ businesses usually increase their capacity, add additional seasonal destinations, and kick-off promotions. All this attracts new clients and consequently leads to a better performance of the company.

According to data observations, the “Sell in May” strategy works best for non-seasonal businesses like banks, tech companies, and all industries that don’t see a jump in their business activity over the My – October period.

Other investment strategies like buying and selling gold also require seasonal timing.

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Sell in May and go away seasonal timing Questions and Answers

  1. Why do they say Sell in May and go away?
  2. What month do stocks go up?
  3. Is now a good time to sell stocks?
  4. What is the stock market doing?

Why do they say Sell in May and go away?

Investors sell in May so that they can capture the profits they have generated up until that point and exit the market in the summer period when there isn’t much trading activity and profit opportunities. According to the concept, assets should be bought back at the end of October/the beginning of November.

What month do stocks go up?

Historically speaking, stock prices have proven to start going up at the end of October and the beginning of November each year. The reason is that investors are returning to the markets, and the trading volume starts growing. Also, October, alongside with January, April, and July, is when corporate earnings are published.

Is now a good time to sell stocks?

If we follow the “sell in May” trading pattern, then the answer is firmly positive. However, this isn’t enough to make a well-informed investment decision. Bear in mind that everything depends on the particular stock and whether it is affected by other factors like seasonality, sector-specific events, news, recent performance, and so on.

What is the stock market doing?

It is trying to shake off the effect of the Coronavirus pandemic. Although it marked, probably the shortest bear market in the history, and embraced a new bullish trend, analysts expect a recession. How serious will it be remains to be seen, but the fact that Germany, as one of the strongest economies, is currently struggling, doesn’t spark positivity.