'Sell In May And Go Away' Is Here... But You Might Want To Buy Stocks, Actually

Well, May is here, and the age-old investment adage "Sell in May and Go Away" is back in the spotlight.

For the uninitiated, the idea behind the "Sell in May and Go Away" adage is that investors should sell their stocks in May and avoid the market until November as the period from May to October is historically a weak six-month combo for the SPDR S&P 500 ETF Trust SPY.

Ryan Detrick, Chief Market Strategist at Carson Group, confirmed stocks have done quite poorly during this timeframe in the past, with the SPY historically gaining only 1.7% on average and higher less than 65% of the time.

Source: Carson Group

However, Detrick point out some reasons not to fear the upcoming six months in 2023, despite the weak historical performance.

May has been a standout month for stocks lately, with nine of the past ten years showing gains, according to the strategist. Additionally, market sentiment is bearish, and the economy is stronger than many believe, indicating that any seasonal weakness could present an opportunity to add to core positions.

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However, there are some potential hiccups during the "Sell in May" period, including May being the second-worst month of the year for stocks during a pre-election year. However, looking at the past decade shows that during this six-month period, the S&P 500 Index has been up nearly 5% on average, versus the 1.7% return going back to 1950.

Source: Carson Group

More than that, the way the market is positioned heading into the next six months can provide a clue as to what might happen next. If stocks are up for the year, then these worst six months have actually gained more than 4% on average and were higher more than 75% of the time. This could lead to better returns during the next six months.

While the historical data suggests that the market's returns during the summer months tend to be weaker than during the rest of the year, there are always exceptions, and every year is different.

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