By RUSS KOESTERICH, THE BLACKROCK BLOG
An old market adage says to “sell in May and go away.” The logic behind this bit of market lore is that the summer months have historically produced relatively poor returns, and investors would benefit from selling their stocks in early May and coming back to the market in the fall, when returns have historically tended to improve.
In my opinion, while now may actually be a good time to trim positions and lower risk, the calendar month isn’t the reason why.
One of the most common findings in behavioral finance is that humans have a need to reduce complex systems to simple formulas. To that end, many investors find comfort in the notion that the time of the year, i.e. seasonality, is a viable investment strategy.
As I’ve written previously, I believe the significance of the calendar has been vastly overstated, with investors too often seeing patterns where none exist. In fact, with the exception of September, a consistently negative month for stocks, most seasonal biases are either functions of a certain time period or are insignificant when you adjust for normal market volatility. The same can be said for “sell in May and go away.”
Keep reading BlackRock On "Sell In May And Go Away" – Business Insider.
Picture source.
