One of the oldest stock market strategies is to “Sell in May and Go Away.” But what does this phrase mean? Is there any supporting reason for selling stocks in May and leaving the market? What are the risks?
“Sell in May and go away” is a well-known trading adage that counsels investors to sell their stocks in May to avoid a seasonal decline in the stock market. An investor selling his or her stocks in May would then buy stocks again in November because the November through April period shows significantly stronger growth in the market than the other half of the year. However, this seasonal strategy flies in the face of the buy-and-hold strategy of investors like Warren Buffett, the wildly successful “Oracle of Omaha.”