‘Sell in May and go away’ is one of the classic rules of Wall Street.
While the economic rationale behind the rule is dodgy, historically the rule has worked for investors.
Myles Zyblock, Chief Institutional Strategist at RBC Capital Markets, wrote about it in his latest U.S. Equity Strategy Weekly note.
The period from May through to September has been a relatively challenging block of calendar months for equities. Average monthly returns during this period not only look light, but the proportion of positive returns seen within each of these months is depressed relative to the rest of the calendar. In fact, we find that the average annualized return for the S&P 500 from May to September is about -0.5% versus +12.1% for the remainder of the year.
Photo: RBC Capital Markets