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“Sell in May” Actually Has Done Pretty Well

Analysts at Bespoke ran the numbers on the "sell in May" theme


As we head into May tomorrow, you’re probably wondering if there is anything to the whole “sell in May and go away” theme. I talked about it a bit last week. Well, I have some new information on the subject  from the analysts at Bespoke.

The analysts looked at the performance of the S&P 500 from November through April and then May through October over the last 20 years. Then they studied the average performance of the index over those two time periods going back 10, 20, 50 and 84 years (to 1928). The result: While the May to October period has not historically averaged declines, it has averaged significantly less gains than the November to April period, no matter how far back you go. November to April has gained roughly 6%, while May to October has gained around 1% to 1.5%.

Now, if you look closely at the table, you will see that 2003 to 2007 was a five-year timeframe when the May-October period was just fine, and another five-year span from 1993 to 1997 when it was great.

I have suggested that the current year appears to have a lot in common so far with 1995, and if that really is the case then the next six months could be up double digits. This is one of those situations when it is nice to know the historical trends, while at the same time it’s very important not to over-anticipate because a regime change could be on the immediate horizon.

InvestorPlace advisor Jon Markman operates the investment firm Markman Capital Insight. He also writes a daily swing trading newsletter, Trader’s Advantage, which aims to capture profits of 15% to 40% and often as much at 100% to 200% in less than 90 days. 

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