“Sell in May and Go Away” – The Seasonal Strategy That’s Losing Its Edge
Commentary by Gabriel Debach, Market Analyst at eToro
As markets move into May, a familiar question re-emerges: does the historical market pattern known as “Sell in May and Go Away” still hold value? This long-standing investment adage suggests stepping out of the market during the summer months—typically viewed as a period of weaker performance—and returning in the autumn for the traditionally stronger year-end rally.
Historical data provides partial support for this view. An analysis of the S&P 500 from 1998 through 2025 shows a notable difference in seasonal performance. During the November–April period, the index delivered a median return of 6.6%, significantly higher than the 2.4% seen in the May–October window. In approximately 77% of those years, the winter half outperformed the summer half. This pattern suggests that, over time, investors have been better rewarded by maintaining equity exposure in the colder months.
However, relying on this seasonal pattern without considering the broader context can be misleading. Key periods such as 2009 and 2020 saw strong market rebounds between May and October. Investors who exited the market in line with the calendar rule during these years would have missed substantial gains. The data points to a statistical tendency, not a reliable trading rule. Market behavior is shaped by complex factors—macroeconomic indicators, interest rates, earnings surprises, and global events—many of which can overpower seasonal trends.
The September Slump and October Turnaround: What the Calendar Really Tells Us
While summer underperformance is evident on average, it is not uniformly distributed. June and August tend to offer below-average or flat returns. But it is September that stands out as the most consistently weak month, with a negative performance in 63% of years and an average return of -1.5%. This month has historically been the most challenging for equities, with many of the past decades’ sharp corrections occurring during the late summer or early autumn period.
In contrast, October, despite its historical association with market crashes, often acts as a turning point. On average, October produces a 1.3% positive return, frequently marking the end of downward trends and the beginning of recovery phases. This sets the stage for a stronger finish to the year, driven by renewed investor optimism, earnings season momentum, and holiday-related spending.
Buy & Hold vs. Calendar Timing: Which Strategy Truly Pays Off?
To assess the practical value of seasonal strategies, simulations comparing different approaches provide helpful insight. A Buy & Hold strategy—remaining fully invested in the S&P 500 from 1998 through early 2025—would have yielded a +469% cumulative return, or roughly a 7% compound annual growth rate (CAGR). A strategy based on the “Sell in May” rule, with investments limited to the November–April window, resulted in a +338% return (CAGR of 6%). By contrast, the opposite seasonal approach—investing only during summer months—produced a modest +30% total return and a CAGR of just 1%.
The differences become even more striking over the last decade. Since 2014, Buy & Hold has increasingly outperformed seasonal strategies, supported by structural tailwinds such as ultra-loose monetary policy, rapid technological innovation, and strong earnings growth in leading sectors. Remaining continuously invested has been more rewarding than tactically stepping out based on the calendar.
A Cautious Lens, Not a Commandment
“Sell in May and Go Away” retains some statistical credibility as a seasonal observation, but it should not be treated as a prescriptive investment rule. While the summer months can be more volatile and deliver lower average returns, the strategy of exiting the market entirely risks missing important rebounds and compounding opportunities.
Rather than abandoning equities with the change of season, investors might instead use this period to reassess risk exposure, rebalance portfolios, or adopt more defensive positioning where appropriate. Seasonality can provide a helpful lens—but in modern, globally interconnected markets, it must be weighed alongside economic trends, central bank policy, and corporate fundamentals. Discipline and adaptability remain the true cornerstones of long-term investment success.
