The Phaserl


The only “Sell in May” article you’ll have to read, ever

by Adam English, Outsider Club:

The history of seasonal market cycles runs into the dawn of history — quite literally for food, but also for the financial world that came much later.

Ben Jacobsen, a finance professor in New Zealand, studied all available historical evidence from 108 different stock markets around the world. His statistical tests detected the seasonal pattern in the United Kingdom stock market as far back as 1694.

Jacobsen even managed to find a Financial Times article dating back to 1935 that refers to the “Sell in May” pattern and implies that it was well-established with market watchers, investors, and financiers.

So yeah, these Sell in May articles are nothing new. However, most of them are simply terrible. Like, ‘what can we trust that worthless intern with’ terrible.

I aim to correct that today and give you a real look at what Sell in May should mean to investors, and it applies to every year ahead as well.

Let’s get right to everything that is right and wrong about “Sell in May,” along with how it can be used to your advantage.

The Misleading Charts

First up, let’s get the basics behind this trope out of the way:

  • The idea is to sell at the beginning of May and buy back in at the beginning of November.
  • Over a 50-year time span, May through October averages a -0.1% loss.
  • Over the same time span, November through April averages a 7.5% gain.

So there we have it. Cut and dried. Case closed.

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