Sell in May and Go Away?
by Richard Lerch
Summer is my favorite time of year. I think this is due to the fact that the season brings with it warmer weather and a number of outdoor activities like BBQ’s, parties, trips to the beach, playing tennis, riding bikes, holidays, etc. Every year, as summer approaches, I tend to recall the old adage that is the title of this month’s Partner Talk letter, “Sell in May and Go Away”.
I first heard this saying twenty-four years ago, when I had recently started in the financial services industry and worked on the government bond trading desk of a Wall Street investment banking firm. While more of a folk tale, it came from the belief by some equity traders that if you sold all your equities in May, went to the beach for the summer and didn’t buy back equities until September or October, you would do better than if you had held all of your equities during this time period.