Sell in May and Go Away: Should You in 2020?

The seasonal suggestion to "sell in May and go away," an adage spurred by the market's superior performance during certain months of the year, is backed by the numbers more often than not.

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The seasonal suggestion to "sell in May and go away," an adage spurred by the market's superior performance during certain months of the year, is backed by the numbers more often than not. But whether investors should follow that advice is an annual debate – one that's a lot more complex this year.

"The data shows that, on average, the November-April periods outperformed the May-October periods," says Jodie Gunzberg, chief investment strategist at Graystone Consulting, a Morgan Stanley business. Gunzberg points to monthly S&P 500 data compiled from January 1928 through March 2020, which shows an average November-April return of 5.1%, versus just 2.1% for May-October.

A few other numbers to consider:

  • The November-April period delivered positive returns in 65 of 91 years (71%).
  • The May-October period delivered positive returns in 60 of 92 years (65%).
  • During positive periods, the average November-April return was 11%, versus 8.7% for May-October.
  • During negative periods, the average November-April return was -9.6%, versus -10.4% for May-October.

Regardless, market strategists and financial experts typically advise investors to avoid timing the market. And this is no ordinary year, as the COVID-19 pandemic has unfurled a global economic slowdown and a frenetic couple months of market action.

Let's take a holistic look at the "sell in May and go away" phenomenon as it applies to 2020. Here, we'll explore what the experts think about the current economic environment, whether the strategy works for investors, their broader investing suggestions right now and which areas of the market they favor.

Data is as of April 29.

Contributing Writer, Kiplinger.com
Ellen Chang is a freelance journalist who is based in Houston and writes articles for TheStreet and U.S. News & World Report. Chang focuses her articles on stocks, personal finance, energy and cybersecurity. Her byline has appeared in national business publications, including USA Today, CBS News, Yahoo Finance and MSN Money. She is a proud graduate of Purdue University and a lover of random acts of kindness, volunteering and cats and dogs. Follow her on Twitter at @ellenychang and Instagram at @ellenyinchang.