“Sell in May and go away.” The iconic stock market phrase that would be “sell in May and leave” returns to the scene at this time of the year. The idea divides the exercise into two: from November to April, when it would be necessary to invest, and from May to October, a time of doubt and withdrawal.
He is right, according to the data. An analysis by the investment platform eToro indicates that in the 15 largest stock indices in the world, two clearly differentiated stages have been seen in the last 50 years. From November to April, the average monthly profitability is 1.2%, with no negative months. From May to October it falls to 0.1%, with three months negative on average. “In the first quarter there are usually positive company outlooks for the entire year, which drives prices. Many investors are also repositioning portfolios. The summer months do not have these positive influences, with generally lower trading volumes,” argues Ben Laidler, market strategist at eToro.
In the Ibex 35 the trend is very marked. Starting in May, profitability is negative (-0.13%), down to 1.14% in the other November-April section, according to the same analysis. The same thing happens in Milan, Paris, London or Tokyo. There is not always a good semester and a bad one: the American, German, Australian or Swiss stock markets give returns in both semesters, but it is true that they are lower from May onwards.
If we look at the evolution since 1928 of the S.
Thus, an investor who started with $1,000 in 1928 and only invested in the best period each year would have $59,259 today. If you opted for the other section, it would be 3,583, the securities agency calculates. It is not that the market is going to sink from May onwards, but rather that statistically it will offer lower returns. “In 64 out of 95 years it has performed better from November to the end of April than from May to the end of October,” he explains.
There is a point to take into account in markets where there is positive profitability in both semesters. “Buy and hold, one of the main maxims of financial gurus, says that we must think long term, be convinced of our strategy. In indices like the S
If the best thing can be to hold on, what is the point of selling in May? In certain markets it is clear that it pays, and it is also a reference for those who need to do it and do not know when. “If in the short term you are going to need liquidity, it may be time. If you wait longer, a worse period begins, with lower profitability,” says Fernández. It may be interesting, for example, to leave the market to cover the tax bill with the income tax return.
Regarding dates, should we sell on May 1, 10, 20...? The truth is that there is no fixed day. “The bad season may have started earlier this year. With the sell in may phenomenon so well known, time-tested and globalized, it can be self-fulfilling if everyone believes it is coming,” says Laidler. This year it is not expected to change: the next six months the performance would be lower, pending business results, central banks and inflation. “After seeing maximums in the last two semesters, it may be true. After increases of up to 20%, it is difficult to repeat another 20%...”, believes Fernández.
