Webcast #20: Sell in May and Go Away? (8 minutes)

The old phrase to “sell in May and go away” implies that investors (or, in this case, speculators) are best to sell their stocks before the calendar turns over to May and then buy them back as November approaches.

Data suggests, however, that this speculative trade is not one to execute.

Since the financial crisis in 2008, the S&P/TSX Composite Index (“TSX”) has appreciated 57% of the time (S&P 500 has appreciated 71% of the time) between early May and the end of October. The median appreciation during those six months has been +1.9% on the TSX and +3.0% on the S&P 500.

Three notable declines have taken place over the last fourteen years, all of which were based on very fundamental global crises at the time. In 2008, the collapse of Lehman Brothers required unprecedented efforts to save the financial banking system from crumbling; in 2011, investor confidence dampened as the European debt crisis spiraled out of control; and in 2015, the collapse in oil prices brought down the TSX.

While we have discussed our caution at this time due to the rising rate environment, the mere fact that May is around the corner does not warrant liquidating a portfolio.