“Sell in May and go away,” one of Wall Street’s oldest adages, implies it is in the best interest of investors to sell their stocks at the start of May and come back to the market at the beginning of November. The adage is still valid, but not as much as before, writes Derek Horstmeyer for The Wall Street Journal.

To determine its accuracy, The Wall Street Journal team examined data on various stock classes going back to the 1950s, including U.S. growth stocks, U.S. value stocks, large and small-cap U.S. stocks, and international stocks. The data was observed in two periods, before 2000 and after 2000 through 2023. The team looked at average returns and volatility for May-through-October versus the rest of the year.

Do you trust the markets to take care of your future? In today’s economic environment, having options besides public stock, bonds, and mutual funds may reduce the risk in most portfolios.

Learn more about accredited investing and alternative assets.

The advice proved especially true for the 20th century. For example, investors who held large-cap stocks outside of the period covered by this adage between 1950 and the end of the century saw an annualized return of 19.62 percent. Meanwhile, those holding large-cap stocks from May-to-October saw a return of 6.72 percent. This represents a 12.90 percent difference on an annualized basis.

Meanwhile, the 2000-to-2023 period shows similar but somewhat low returns. Those holding large-cap stocks from January to April and November to December earned an annualized return of 13.29 percent, while investors holding large-cap stocks during the May-to-October period recorded an annualized return of 8.64 percent.

The average volatility has increased as well, from 12.44 percent outside of the May-to-October period from 1950 to 1999 and 14.14 percent for the May-to-October period, to 17.50 percent and 14.31 percent for those same periods in the last 23 years.

“I love reading about all the different magic bullets when it comes to stock investing,” said Fred Hubler, CEO and Chief Wealth Strategist at Creative Capital Wealth Management Group in Chester Springs. “The stock market is a complicated, imperfect system and in any complex system, there tends to be patterns. These patterns work until they don’t. At this part of the economic cycle, we are building up cash reserves since they are paying close to five percent for a risk-less asset, and that should help weather any future stock market storms.”

Read more about “Sell in May and go away” in The Wall Street Journal.

Want to know if you’re on the right path financially? Creative Capital Wealth Management Group’s Second Opinion Service (SOS) is a no-obligation review with one of CCWMG’s Wealth Strategists.

Schedule an SOS Meeting with Fred Hubler and his team.