Should You “Sell in May and Go Away?”

If you follow investing topics on social media, you’ve probably heard more than a few “finfluencers” talk about “selling in May and going away.”

It’s quite a catchy phrase, and the more you hear it, the more the FOMO center of your brain starts kicking in. 

Is selling off your stock in May really a viable investing strategy that could make you easy money before summer? Where did it come from? Is it based on any sort of evidence or reality? 

Well, the long answer involves wig-wearing British aristocrats, horse racing, NVIDIA stock, and gardening analogies. But to quell your FOMO early: No, you’re not missing out on anything. 

Here’s what “sell in May and go away” really means, and why it’s even wackier than it sounds. 

. . .

What Does It Mean to “Sell in May and Go Away?” 

“Sell in May and go away” is an investing theory for the stock market. It basically translates to: “Sell your stocks in May because the stock market cools off during summer months while Wall Street is on vacation.” 

The phrase traces all the way back to London’s financial district in the late 1700s. Back then, the complete phrase was: “Sell in May and go away, and come back on St. Leger’s Day.” 

In other words, you’re a rich British aristocrat — why not take the summer off, enjoy the British Triple Crown horse racing championship, and come back to work after the last race at St. Leger’s Stakes? 

The phrase has stuck around for 250 years because, well, rich people kept going on vacation in the summer. You know the types — the ones who ask, “Where do you summer?” 

Then, as a result of the 1% taking a break, the stock market slowed down. This encouraged more investors, speculators, and hedge funds to sell or halt trading, too, and the cycle perpetuated itself for centuries. 

“Sell in May and go away” statistics

Amazingly, there’s data to suggest that “sell in May and go away” may still be a thing today. 

A 2024 analysis by eToro found that over the past 50 years, the average rate of return for the world’s 15 largest stock indices was 1.2% from November to April and just 0.1% from May to October. 

As for the U.S. alone, S&P 500 growth averages around 1.05% from November to April and just 0.27% from May to October. 

For the NASDAQ, it’s 1.44% and 0.68%, respectively, according to U.S. News. 

Granted, even supposed “patterns” in the stock market can have countless factors contributing to them. 

Some say that hedgies (aka hedge funds) going on vacation plays only a minor role in why the stock market slows down during the summer — and that Q1 earnings reports (which often come out in May) are the real fire extinguisher cooling off mid-year investing. 

Either way, there’s no denying that some sort of pattern exists, and there’s probably a reason why the adage has persisted longer than the U.S. has even been a country. 

So, should you sell in May and go away? 

Reasons to Sell in May and Go Away

Before we dive into the numerous reasons why you probably shouldn’t sell in May, let’s touch on a few niche cases when it might actually work out for you. 

1. You need the cash

In general, it’s best to leave your investments alone for as long as possible so they have time to grow and appreciate in value. But if you need the cash to cover your basic needs (e.g., rent, groceries), then it’s a valid time to sell a few stocks and take care of yourself. 

Covering a down payment on a mortgage is another valid reason to sell a few stocks. You’ll just be moving money from one investment class to another. 

2. There’s an opportunity to reinvest it elsewhere

Though this technically doesn’t involve “going away,” another valid reason to sell stocks is to reinvest the capital somewhere else. 

That could be buying real estate, paying off high-interest debt, or even just throwing it in your Roth IRA so you can eventually retire as a millionaire.  

3. You’re in a high-risk asset class

Another great reason to sell and move your money into lower-risk areas is for the mental health benefits. If you’re constantly worried about your investments and checking Robinhood eight times per day, you might be investing beyond your natural risk tolerance. 

Risk tolerance, in a nutshell, is the maximum amount of risk an investor can take while still getting good, quality sleep at night. If the whole point of investing is to create health, wealth, and peace of mind, then an investment strategy that drains two out of three of those things isn’t a good strategy. 

Now, you might’ve noticed that all three reasons I listed for why you should sell in May and go away have nothing to do with May. All three are just general reasons for why it might be good to sell some stocks in the first place, regardless of timing. 

So technically, they are reasons to sell in May. They’re also reasons to sell in June, July, October, Valentine’s Day, Salt Bae’s birthday, and virtually any other day of the year that your life circumstances or broader investing strategy call for it. 

As for reasons you should sell in May specifically, well, those reasons are in short supply. There are, in fact, far more reasons you should not sell in May and go away. 

READ MORE: Long-Term vs. Short-Term Investment Strategies

Reasons Not to Sell in May and Go Away

To recap, the driving philosophy behind “sell in May and go away” is that the markets slow down during summer months while the rich are busy getting tan in Mallorca, buying Bugattis, or playing Succession drinking games with Dom Perignon. 

As a result, it’s a good time to:

1. “Get out” before things “cool off,”
2. Stuff your cash under the mattress, and 
3. Re-enter the market right before Labor Day. 

But that sort of investing logic is deeply flawed for numerous reasons. 

1. Markets don’t drop in May — they cool

There’s plenty of historical data suggesting that the stock market does indeed cool off from May to October versus November to April. The difference is so stark that Wall Street has a term for when things pick back up again: they call it the Halloween Effect. 

But a common mistake many new investors make is that they equate “cooling” with “dropping.” 

Dropping means they’re not growing. Cooling means they’re still growing, just not as much. 

To draw an analogy, imagine you had a savings account generating a healthy 5% APY (interest rate). Your bank then emails you to say, “Hey, for the next six months, you’re only getting 4%.” 

Should you: 

1. Pull your money out and stuff it under the mattress?
   Or
2. Shrug your shoulders, and be grateful that you’re still getting something? 

Needless to say, (2) is the better choice since 4% is still better than 0%. Even though your rate of growth is “cooling off,” it’s still growing and compounding more than it would if it were just sitting in your checking account.

2. “Time in” is always better than “timing” 

Pop culture has led many to believe that stock market investing should be fast, sexy, and high-octane. 

The Wolf of Wall Street showed us how playing the markets right (legally or otherwise) can lead to a mansion and a Lamborghini Countach before age 25. 

In a similar vein, the infamous GameStop saga in 2021 showed how those who paid careful attention could defeat the hedgies at their own game — and make near-instant millions in the process. 

But 99.97% of market analysts, wealth advisors, and comfortable retirees will tell you that building wealth from stocks has nothing to do with timing, and everything to do with “time in.” 

@erikakullberg Investing from 25 vs 35 – guess the difference 🤯😱 #erikataughtme #lawyer #investing ♬ original sound – Money Lawyer Erika

The stock market is not a casino — it’s a garden. It’s best to plant seeds, water them (with more capital), and let them grow over months, years, and decades. Eventually, their “fruit” will help you live and retire comfortably. 

In other words, active trading (or constantly sticking your fingers in the soil to make things grow faster) is extremely difficult and has a low success rate. 

By contrast, passive investing (aka buying a diverse array of ETFs and letting it sit for 50 years) requires just a few minutes per month and has an extremely high success rate. That’s why most people do it that way. 

3. Historical data doesn’t mean much in the investing world

The final reason why “sell in May and go away” — and other attempts to time the market in general — tend to fail is because they rely upon past evidence to predict future stock market behavior. 

To be fair, past evidence is a strong indicator of future behavior in other aspects of life. If your boyfriend forgets to close the dishwasher 38 times in a row, you can bet good money there will probably be a 39th. 

But stocks aren’t people. And as a result, what they’ve done in the past means virtually nothing. To quote Nobel Prize-winning economist William Sharpe, “Past returns are a rotten predictor of future returns.” 

Case in point, when the pandemic hit in 2020, the summer months ended up being the fastest growth period of that entire year. 

When we look at an individual stock, things arguably become even less predictable. Back in 2022, investor darling NVIDIA Corp (NVDA) collapsed and lost 50% of its value by year’s end. 

Back in 1779, British aristocrats would probably want to dump the toxic stock so they could enjoy the horse races without losing any more money. But since “sell in May and go away” isn’t really a thing anymore, NVDA exploded in late May and has remained in the stratosphere ever since. 

In summary, “sell in May and go away” is just another method of timing the market — and timing the market is inherently flawed because a stock’s past behavior has very little bearing on future returns. 

READ MORE: How Does Dollar-Cost Averaging Work?

FAQs

What are the best months for the stock market?

In truth, there really is no “best” month to start investing in the stock market. “Time in is better than timing” — meaning it’s better to invest as often as you can and let your portfolio grow on its own for as long as you can. 

What is the best day to sell stocks?

The best day to sell stocks is the day that you truly need the cash. Given the overall unpredictability of the stock market, there’s no day, week, or month that’s better to sell than any other. 

It’s best to just let your investments sit until you need to exit for personal reasons or you find a better place to invest the capital (e.g., down payment on real estate, a lower-risk stock, etc.). 

Wrapping up

“Sell in May and go away” is incredibly catchy, and that might be the only reason it’s persisted over the years. 

Yes, the stock market tends to perform a bit better from November through April than from May through October, but that doesn’t necessarily mean you should sell anything at the beginning of summer. 

Slow growth is still better than no growth, so maybe the new catchphrase should be, “Buy in May and go away,” or alternatively, “Selling in May doesn’t pay.” 

To learn more about investing strategies that do pay, check out these episodes of the Erika Taught Me podcast: 

• The Missing Piece in 99% of Financial Advice
• Investing Advice from the Most Powerful Woman on Wall Street
• Why Getting Rich is Easy And Being Patient is So Hard

. . .