Sell in May and Go Away

The term "Sell in May and Go Away" is a financial adage that suggests investors should sell their stocks in May and avoid the market until November. The idea is that the stock market tends to be more volatile during the summer months, and investors can improve their returns by taking their money out of the market and investing it in something safer, such as cash or bonds.

There are a few reasons why the stock market may be more volatile during the summer months. One reason is that there is less trading activity during the summer, which can lead to wider spreads between bid and ask prices. This can make it more difficult for investors to get the best price for their stocks.

Another reason why the stock market may be more volatile during the summer is that there are fewer economic reports and other news releases. This can make it more difficult for investors to make informed decisions about their investments.

Finally, the summer months can be a time of increased political uncertainty, which can also lead to volatility in the stock market. For example, the summer of 2016 was a time of great political uncertainty, as the presidential election was taking place. This uncertainty led to increased volatility in the stock market, as investors were unsure about the future of the economy.

Of course, the "Sell in May and Go Away" adage is just that - an adage. There is no guarantee that investors will make more money by following this advice. In fact, there are some studies that suggest that the stock market can be just as volatile during the winter months as it is during the summer months.

Ultimately, the decision of whether or not to follow the "Sell in May and Go Away" adage is a personal one. Investors should weigh the risks and rewards of selling their stocks in May and taking their money out of the market. If they are comfortable with the potential for volatility, they may decide to stay invested. However, if they are risk-averse, they may decide to sell their stocks and invest in something safer.