Common Cents About Your Money: Mid-Year Update

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Listen to our insightful episode of Common Cent$ for Your Money as we delve into the age old adage, "Sell in May and Go Away." Tune in to make smarter financial decisions and ensure your money works for you all year round. 

Don't forget to sign up to our Mid-Year Update Webinar happening on June 12. Don't miss out and sign up here!


Hello, welcome back to the Common Sense About Your Money podcast.

My name is Randy Beeman and I am part of the Wealth Advisory team at Glass Jacobson Wealth Advisors.

We're an independent registered investment advisory firm and we have offices in Virginia and Maryland.

We're a full service firm offering our clients financial and retirement planning, as well as complete asset management services.

We produce this podcast every month and our objective is to discuss timely topics of interest in a conversational, informal style.

Our goal is to help make the often complex world of investing more understandable and hopefully bring you some good ideas along the way.

Speaking of the podcast, we're going to be hosting a special live podcast event next month that's going to be a little bit longer than usual, probably about 40 or 45 minutes, and it's going to include several other members of our financial team.

We're going to be providing an update on the investment markets year to date that'll include some background highlighting the forces that have been driving the markets, also discussing potential changes to the rules surrounding inheritance taxes, and finally bringing up some important updates on the benefits of saving for retirement and tax deferred accounts.

We've sent out e-mail notifications about registration, but if you didn't get an e-mail from us and you want to be added to the list, just e-mail me at and we'll get you a registration link.

The podcast is going to be live at 12 noon on June 12th, but it's also going to be recorded for those that can't catch it live.

Here's the important part, though.

You have to register for the event in order to get access to the recorded version.

So e-mail me if you want us to send you a registration link.

All right, let's jump right into our topic for today.

Wall Street traders, much like golfers, tend to be a superstitious bunch.

There are all kinds of investing superstitions.

There's the January effect, the Super Bowl indicator, the Halloween curse, the new moon versus the full moon in impact, and even the witching out.

Today I want to talk about the adage.

Or I guess it could be also called a superstition of sell in May and go away now.

It's a popular investment strategy that suggests investors should sell their stock holdings in May and reinvest again after the end of the summer, typically around October.

The rationale behind this strategy is rooted in historical market trends and seasonal patterns.

So let's delve into the history of this theory and maybe discuss whether it might be relevant in today's world.

The origin of sell in May and go away is a little bit cloudy, but the most often cited history can be traced back to England and more specifically the London financial district.

The original phrase was sell in May and go away and come back on Saint Ledger's Day.

Now that refers to the Street Ledger Stakes, A prestigious horse race established in 1776, the Street Ledger Stakes is one of the most well known horse races in England.

It's the last leg of the British Triple Crown, and it's run at the Doncaster Racecourse in South Yorkshire in late September of every year.

In its original context, The Adage recommended that British investors, aristocrats and bankers should sell their shares in May, relax and enjoy the summer months while escaping the London heat, and return to the stock market in the autumn.

After completion of the Saint Leisure stakes, the historical term was updated and repopularized by Yale Hirsch in 1967 with the publishing of the Stock Traders Almanac.

It's still being published today and of course it's also online, but the Stock Traders Almanac is a compendium of cycles, trends and patterns used by many day traders, long term investors, and portfolio managers.

The concept suggests that market returns during the summer months, especially May to October, tend to underperform compared to the other half of the year.

Investors adopting this strategy in the US would reduce their holdings between Memorial Day in May and Labor Day in September to avoid potential seasonal weakness in the equity market.

So now that we've looked at a brief history of the phrase, the two big questions I want to tackle are has it actually proven to be a consistently workable strategy?

And given the current circumstances, is it a strategy an investor should follow?

So to find the data to answer the first question, has the strategy actually been proven to be a sound investment strategy to follow in the long term?

I turn to Forbes to find some answers.

So according to their data over the last 50 years, stocks do indeed perform better in the in the November to April.

Than in May to October.

Let me show a chart and I won't be able to illustrate what that actually is showing you.

So here you see a chart showing the period from 1970 to 19 to 2023.

So in the last 52 years, the S&P has averaged 6 1/2 percent gain during November to April versus only a 1.6% gain the rest of the year, a pretty sizable difference of 4.9% annually.

The Dow and the NASDAQ have even bigger performance differentials.

The November.

For the Dow was 7.6%, while the May to October period saw a less than 1%, just about 3/4 of a percent annual average return.

That's a big difference of 6.9% on average.

And for the NASDAQ, you can see that the November to April.

Averages 8.8% versus just 2.9% in May to October, a difference of 5.9%.

Another interesting stat is that since 1945, the S&P 500 has had positive returns an average of 7070% of the time during November to April and just 66% during the May to October time frame.

So the numbers over the long term do look pretty compelling and seemed to validate the strategy.

But does that mean you should either sell all your equity holdings or at least reduce them significantly in May?

In late May, every year, well before you jump to that conclusion, you have to remember these are long term average returns in any given single year.

It might not turn out to be even close to the long term average.

Returns have often varied in these time periods and there have been a lot of different exceptions.

Just a few of the factors behind the uniqueness of each.

Could be economic conditions, the business cycle and the general investment market environment.

Seasonal factors also play an important role here.

End of year bonuses and the Santa Claus rally, which refers to the stock market's tendency to rally over the last few weeks in December, come into play.

Some economic factors include increased holiday shopping optimism and improved morale around the holidays and investors sort of settling their books before going on holiday.

While February and March are relatively mild in terms of growth, the stock market generally lifts in April because of the anticipated release of first order first quarter earnings reports.

In contrast, the period from May to October tends to be less optimistic.

First quarter earnings results are already over and many people spend less time paying attention to their stocks because they're getting ready to go on summer vacation.

In addition, in election years, there tends to be a weakness of the stock market in September and October due to uncertainty around the election results, which could be especially true this year.

And then you have the outlier Black Swan events like the COVID-19 pandemic.

In the period between November 2019 and April 2020, which is normally a period of higher returns, there was there were significantly poor returns in the market.

By the way, the term Black Swan event was popularized in the financial world by economist and writer Nicholas Taleb to reference something as a rare occurrence, but it actually originates from an old Latin expression with the same meaning generally.

So because various events and random factors can impact the outcome of any single given year, maybe the best way to think about the sell in May and go away adage is that it's something to be aware of and keep in mind when managing your investment portfolio during the year, but don't think of it as a fixed rule or necessarily the expected outcome of any specific time period or individual year.

So that's the show for today.

I hope you've enjoyed it.

Don't forget to e-mail me at if you want to get the link to register for our special live podcast.

It's going to be at noon on June 12th.

Remember, even if you can't listen to it live, it will be recorded, but you have to register in order to be able to get access to the recording.

I'll be joined by two advisors on our Glass Jacobson team on that day and it should be a great show.

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