Sell In May And Go Away

Sell In May And Go Away: Do the Markets Drop in May?
Since 1950, the Dow Jones Industrial Average has had an average return of only 0.3% during the May-October period, compared with an average gain of 7.5% during the November-April period. While the exact reasons for this seasonal trading pattern are not known, lower trading volumes due to the summer vacation months and increased investment flows during the winter months are cited as contributory reasons for the discrepancy in performance between the May-October and the November-April periods, respectively.



 Disadvantages of Sell It in May and Go Away
There are limitations to implementing this strategy in practice, such as added transaction costs and tax implications of the rotation in and out of equities. Another drawback is that market timing and seasonality strategies do not always work out, and the actual results may be very different from the theoretical ones.