Unless you live under a rock, you’ve probably heard how we entered the dreaded month of May and this is the start to a horrible six month stretch for holding equities. While this is indeed true, there are always exceptions.
Earlier this week I mentioned when Jan/Feb/March/April were all green (like this year), May actually holds tough. In fact, May is up about 1 percent on average and has a solid 2.3% median return. The month you want to avoid is actually June, which is hands down the worst month the past 5 and 10 years.
What is really interesting though was this wasn’t always the case. In fact, some of the old timers might remember when the saying was “Buy in May, Make Some Hay.” That’s right, buying in May and holding for the summer once was the way to go.
If you look at the Dow returns from 1900-1949, May was about flat over this time, but the next three months were the three strongest months of the year!
Fast forward to today and the past three years selling in May was very smart. Still, as a trader it is our job to be open to anything. This shows that history isn’t always so black and white, and things indeed do change over time.