Returns have diminished and risk has increased in recent years

  • The adage “sell in May and go away” is not as useful as it once was
  • Returns tend to be better for those who heed the Wall Street adage
  • Volatility has been greater outside of the summer months in recent years
  • Research shows that the adage held true in the 20th century
  • Average returns were higher for stocks held outside of the May-to-October period
  • Risk was lower for stocks held outside of the May-to-October period
  • In the 21st century, returns have diminished and risk has increased
  • There is still some truth to the adage, but heeding the advice now comes with greater risk

The adage "sell in May and go away" has been a long-standing belief on Wall Street, suggesting that investors should sell their stocks at the beginning of May and return to the market in November. However, recent research shows that this adage is not as useful as it once was. In the 20th century, investors who held stocks outside of the May-to-October period saw higher average returns and lower risk. However, in the 21st century, returns have diminished and risk has increased. While there is still some truth to the adage, heeding the advice now comes with greater risk.

Factuality Level: 8
Factuality Justification: The article provides a detailed analysis of the ‘sell in May and go away’ adage, supported by data going back to the 1950s. The author presents historical returns and volatility for different stock classes, comparing the periods before and after 2000. The conclusions drawn are based on the data presented, making the article informative and fact-based.
Noise Level: 3
Noise Justification: The article provides a detailed analysis of the ‘sell in May and go away’ adage, backed by historical data and comparisons between different time frames. It stays on topic and supports its claims with evidence and examples. However, the article contains some repetitive information and unnecessary details that could be considered noise.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses the historical performance of different stock classes and the potential benefits of selling stocks in May and returning in November. This information can be relevant to investors and may impact their investment decisions.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article does not mention any extreme events or their impacts. It primarily focuses on the historical performance of stocks during different time periods.
Key People: Derek Horstmeyer (Professor of Finance at Costello College of Business, George Mason University), Keya Patel (Research Assistant), Amir Murad (Research Assistant)

Reported publicly: www.wsj.com