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Sell in May and Go Away

The month of April is ending and the month of May is coming. As an investor, have you heard of the old saying “Sell in May and Go Away“? The phrase suggest that investors should sell off their stock portfolio in May and only return in fall. Fall is another term used for Autumn in America. There is no fall in Singapore.

Being curious about how the old saying came about, I decided to do some research. The full phrase actually goes like this

“Sell in May and go away, do not return until St. Leger’s Day.”

The saying actually dates back to old England whereby the stock brokers will go for their summer vacation in May. They will return to work in September. The final horse race season ends in September and the stocks brokers will only return to work after the horse racing season ends.

Does the phenomenon happen to Singapore stock market as well?

I used the STI ETF charts from year 2013 to 2015 since it tracks the Straits Time Index to find out.

STI ETF 2013

The STI ETF was on a downtrend from May to September.

STI ETF 2013

STI ETF 2014

The STI ETF was on an uptrend from May to September.

STI ETF 2014

STI ETF 2015

The STI ETF was on a downtrend from May to September.

STI ETF 2015

Conclusion

From the above charts, it seems that the Mr Market does not always follow “Sell in May and go away”. In year 2014, if you have sold in May, you have probably missed the market rally.

Do you believe in “Sell in May and go away”?

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