Why You Should Sell in May and Go Away

Almost all market-timing schemes are silly. This one isn’t.

Thinking of cutting back on your stock investments because you’re worried that the market will fall? Want to use some of your gains to buy a new car? Well, it may be the perfect time to take some money off the table. Why? Because history has shown that May 1 marks the start of the least-favorable six months of the year for stocks.

Look at the numbers. From 1929 through the end of 2014, Standard & Poor’s 500-stock index returned an average of 7.1% from November through April but just 3.9% from May through October, according to Morningstar. That’s an average of 3.2 percentage points per year better during the November-April period.

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Steven Goldberg
Contributing Columnist, Kiplinger.com
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for Kiplinger.com and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or sgoldberg@kiplinger.com.