Should you sell in May and go away?

Here's some "food for thought" for those mulling over the old adage "sell in May", says John Mauldin on Investorsinsight.com. Between 1950 and April 2009, the November-April period has certainly been a better bet than the other six months of the year.

In an average year, the winter has produced a total return of 7.9%, compared with 2.5% for the summer months. But since 1950, US stocks have been through two long-term bull runs (around 1950-1966 and 1982-1999) and two bear markets (1966-1982 and an ongoing one that started in 2000).

Look at the seasonal pattern in the bear phases (so 1965-1982 together with 2000-April 2009) and it's interesting to note that the May-October period is particularly "ugly". The average return over this period is -0.3%, compared with 4% in the winter time. Yet another reason for caution.

MoneyWeek

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