There is a saying in stock market investing: “Sell in May and go away.” I think it’s a stupid saying.
As I’ve written about before, the best performing market days often come in the most surprising times. It’s impossible to predict when they will happen. But missing those best days can be a killer for your future money.
“Sell in May and go away” is based on the idea that — on average — the market has its best rolling 6-month return from November to April. There’s some cultural context here, too. For all you “Bridgerton” fans out there, May marked the end of the London social season, and is when many aristocrats would leave the city and retire to their country homes for the summer. This would cause London commerce to slow down.
Nowadays, traders don’t leave for the countryside, but there is still often a noticeable downtick in trading activity. When the weather is nice, most people don’t want to be thinking about boring things like their investment portfolio.
But just because you would rather be thinking about patio day drinking and spending time in the sun, doesn’t mean you should take your investments out of the market. The best portfolio is one where you can set-it-‘n-forget-it (a key part, of course, being the set-it portion). When people say “sell in May and go away” they’re suggesting you put all your money in treasury bills: essentially cash.
“Sell in May” will put a pause on the chance you will lose money. But it also puts a pause on you making money. And investments are supposed to grow. Investments are the dollars you don’t need in the short-term. Investments don’t need pauses.
Of course all of this depends on what level of risk you are comfortable with. Some people simply don’t want to deal with the ups-and-downs of the stock market at all. And that’s totally fine! Just be prepared to sock away a LOT more cash in your lifetime.
It’s something I work with my clients on: finding the right portfolio risk fit for them. Curious about your investor composure? Click the “Get Started” button below to take a 2 minute assessment to gauge how you might react to market craziness.
Not sure what makes sense for you? Let me help. Book a free consultation here: https://calendly.com/valkyriefinancial/consult