The Roulette Trade
It seems that old Wall Street adage: “Sell in May and Go Away” attempted another comeback tour this year. Yet by month’s end, the market did what it so often does with neat little narratives: dismissed it.
The saying itself dates back centuries to London’s financial district, where merchants and bankers noticed that returns tended to sag during the summer months while the city’s moneyed class escaped to the fresh air in the countryside. The logic later evolved into the notion that the six months from May through October were structurally weaker than the November through April stretch. Bears hibernate in winter, the saying goes. Markets apparently do the opposite.
And for a few moments this month, it looked plausible. Volatility returned, haphazardly. Headlines out of the Middle East rattled traders. Commentators dusted off their seasonal charts with the enthusiasm of Gen Z rediscovering vinyl. Search interest around “Sell in May” surged again. But then came the inconvenient reality: the S&P 500, Nasdaq and Dow spent the latter part of May hovering near and in several cases reaching fresh highs.
Which raises the uncomfortable possibility that “Sell in May” belongs to the same category as cocktail party market wisdom and the latest prediction about the death of the pied-à-terre in Manhattan: endlessly recycled, occasionally persuasive, but rarely durable in the longterm.
The data does little to rescue it. Studies spanning decades from CXO Advisory Group to more recent analyses consistently arrive at the same conclusion: while the winter months often outperform, investors who simply stayed invested year-round generally did best once transaction costs and taxes entered the equation.
However, this is anything but a typical cycle. Markets today are driven less by seasonality than by liquidity, AI exuberance, geopolitical headline roulette, and the modern market’s unshakable faith that every dip is merely an inconvenience before the next all-time high. The old rules still appear on cue. The market simply no longer feels obligated to follow them.
