Sell In May And Go Away by Mark Vakkur
Still As True As Ever
The S&P 500 continues to make most of its gains between
November and April and underperform between May and
October. Here is an updated look at this phenomenon and
how you can put it to use.
From November 1979 until November 2012, the S&P 500
climbed from 101.82 to 1,412.16, a gain of 1,287.23%
(Figure 1). In net points, the index gained 1,380.8
during the November–April period but lost 70.4 during the
May– October period of this 22-year span.
Looking at the numbers
Using nominal point differences can be misleading: The most
recent years are given more weight since the number of points gained or lost is greater for every percentage point change
in the S&P 500. Yet, even by using percentage differences,
there are dramatic differences between the November–April
and May–October spans (Figure 2).
The average November–April span saw a 7.3% change
in the S&P 500 (15.1% annualized) versus 1.9% (3.9% annualized)
from May–October; the November –April period
outperformed the May–October period by 5.4% on average.
If you invested $10,000 on November 1, 1979 and moved to
cash on April 30 each year, it would have grown to $89,361,
ignoring dividends, money earned in cash, commissions, and
slippage. By contrast, the same $10,000 invested on May 1,
1980 and moved to cash every Halloween would have grown
to $15,520. The November–April investor would have gained