Sell in May doesn't work. Except maybe this year.

Added: 2026-05-09

[00:00:01]Sell in May and go away. You've definitely heard the saying. Everybody has. So, in this video we're going to dive into is there any merit behind it or is it just one of those things that people continuously say and and has no bearing on what the market actually does and see if there's should we be acting as I'm recording this it's the beginning of May. So, uh should we be selling in May and and should we be going away? So, let's find out. Now, this seasonality stuff I think is interesting and I'll talk about why I think at the end there's a very specific for this particular year this may actually hold some merit even if it doesn't in most years. But, if you want to know more about how I kind of wrote more robustly test systems and and build systems actually launched a free PDF. You can go to statsettrading.com. You can just click on get the 25-year backtest and from there you just emailed that PDF.

[00:00:54]That puts you on my email list. So, every time I do a video and all of that I can reach out. Now, in this is the overall stats. So, from the year 2000 to 2025 here are the headline stats. You know, year this period, the green one.

[00:01:10]This is November to April and then over there in the red that is May to October and you can it's better for this period of time. Now, in both cases positive.

[00:01:19]That's really because if put your finger on a daily chart of the spy, go 1 year forward and you are up from that period of time. So, maybe maybe there's something here. However, just like with all data you should generally go beyond the headline and dive a little bit deeper into the actual numbers. Now, if you do that I think this is where this this came from. So, I'm old enough to remember 2008 and traded in 2008 and you can see if you take a look here from this this period of time, which this is the great financial collapse over here and this is sorry, this is the dot-com bubble. This is the great financial collapse. For that period of time, in most cases, sell in May go away worked.

[00:02:01]And you ended up getting this thing in which, in the beginning, beginning of the year 2000, I guess, you have a negative return for that period of time, and then a positive return for the rest of the year. I think probably where the saying at least got popularized, even if that's not where it was created from. But as time got went on, this next chart is 2011 to 2020.

[00:02:22]It's a little bit less disparaging, and then over the last few years, right here, last four or five years, it's been about even. Now, that makes sense because if there was an extreme edge to be had here, like most things, that gets arbitraged out of the market. People would start, you know, shorting in May, and then other people would know that people are going to short in May, so they'd be buying to make them cover their short positions. The market is very combative for a reason, that's what makes it very efficient, is that if there is any arbitrage out there, it gets kind of pulled away. So, the this kind of just shows, I think, the best with these equity curves. Again, green line is November to April, red line is May to October. And yes, you make more if you hold for this period of time because you skipped some big drawdowns over there, and we did see a headline total difference, right? It's It's 10,000 to 40 versus 10,020.

[00:03:13]But way at the top, that's just the S&P 500. So, if you just held through all of it, it ended up doing better. So, some edge there, I guess we could say, but I think minute enough that it might not matter. However, this year, I think things are might be interesting to look at. Now, I've been on the record pounding the table to anyone and everyone who will listen to say we are in an election year. So, in an election year, especially a midterm year, there is a seasonality that generally takes place. Doesn't have to right now, we're in a runaway bull market, but over over time, if you average out every midterm year, you get big swings up and down, you get sideways consolidation, and then after the election is done, which is in November or leading into the election, you get that that rally. That is generally what the mid-term year chart looks like. And you can see here kind of holds true where there is way more green, which again is the November to April, than there is the red. So, this particular year, this could make sense to potentially lighten up into if we believe that the choppiness of the election year is going to come in into this May cycle. Now, why would we get, you know, why does it make sense that we could potentially have this choppiness that happens in the mid-term elections? Well, if I'm a large hedge fund or a large institution, and I'm not a Canadian, which I am, I'm looking down there and I'm saying, "I don't know who is going to make the rules." And if I don't know who's going to make the rules, then I can just wait.

[00:04:44]Right, these guys are investing for months and years, quarters, decades. So, I might not know if this team is going to win, which may be pro sector A, and then or this team wins and they're going to be pro sector B. So, I don't know where to place my bets until we get closer and I have more of a certainty of what this is going to happen. And the fact that we have been ripping into this period may be a let's come off a bit, maybe let's sell a bit, wait till this election's over and all of that is sorted, and then go from there. And again, these are just averages, it's just speculation. I don't know, and nobody knows, I think is the best the most important part. And this last chart just kind of really kind of solidifies it. If you take out mid-term years here, then you have all other years are about equal, and it's the mid-term years that really suffer this phenomenon just for the reasons we just talked about where if I'm a large hedge fund manager, maybe I don't want to take my bet right now, maybe I want to take my bet just a little bit in the future. So, I don't I'm I'm not going to make a decision based off of this.

[00:05:54]But, the reason I love to study this stuff and I love to look around is because if there was something obvious, you know, that would be part of Stat Search Pro now. We'd taken advantage of it. But, it's also just good to know about it and have it in kind of the back of my head that if we start to see weakness, I don't really need to panic that much and maybe we lean on pullback systems or mean reversion systems, shorter-term systems, day trading less than we would the investment systems, right?

[00:06:22]So, the investment systems right now, you know, everything's going up. That's fantastic. But, maybe it gets a little bit more active if things calm down. And that's the reason I wanted to give this to you guys to say the saying wasn't completely made up. It's not something I would particularly take action on. But, the whole midterm election year, that thing's a little bit more interesting to me. I don't think an arbitrary calendar time makes sense.

[00:06:45]But, when it comes to seasonality, if you wrap that around elections, and then you wrap that around taxes, those things make a little more sense because that will force people's hands. People have to act around elections. People have to act around midterms. So, if we do come in a little bit, this might be why.

[00:07:04]And then we'll just wait until that election is over. So, again, if you like this content, if you know, I'm going to ask you to do all the stuff that YouTubers do with the like and the share and the retweet or whatever it is.

[00:07:15]I appreciate you guys for coming by. I will talk to you guys next week and until next time, get away from the screens.