Selling in May is a losing strategy—if you're out of the market during the summer, you will lose out on returns.
It’s that time of year again. The perennial phrase “Sell in May and go away” gets the most unwarranted attention of any conventionally unwise cliche, and even respectable newsies like the Wall Street Journal get caught up in the hype. The expression comes from ye olde times in London, when stock-market trading would dry up over the summer months as bankers took vacation. The phrase implies that timing the stock market is as easy as reading a calendar and knowing when to plant your seeds. Googling the phrase yields an astounding 518 million hits – pretty impressive. It’s a perennial hit, and one which it’s worth revisiting to see how wrong it has been.
Is the summer really any different?
Source: Analysis by Betterment, data from Yahoo Finance.
So if you want to invest smart this summer, sit back and do absolutely nothing. Investing is still one of the few cases where you do better, by doing less. Enjoy it.
*Historical performance is provided since 2003 given availability of relevant data. Data and performance returns shown are for illustrative purposes only. Please see our Historical Performance Calculations and Presentation Methodology disclosure for more information.
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