by Urban Carmel
The “summer months” start next week. The period from May through October is known as the “worst 6 months” of the year for stocks. True, the probability of a truly bad month is higher and the probability of a really great stretch of months is lower during the summer than in the winter. But, overall, the expected return over the next 6 months is positive: median returns in winter and summer since 1970 are nearly the same. You might very well sell in May and buy back higher in November.
One of the axioms of Wall Street is ‘sell in May and buy after Halloween’. Mark Hulbert says that over the past 50 years, the Dow has an average return of 7.5% from November through April (“winter”) versus an average loss of 0.1% from May through October (“summer”).