Does ‘sell in May’ work?

Investors who followed the traditional advice to sell their stocks in May this year will be ruing their decision as major global stock markets have enjoyed a strong summer resurgence.

One of the most often-repeated investing mantras says ‘sell in May and go away, don’t come back until St Leger Day’, referring to a well-known British horse racing day which takes place in September.

The saying is thought to date back to a 1950s edition of Stock Trader's Almanac. In those days, financial professionals would typically spend most of the summer on holiday. Those left would have to contend with drifting markets during the summer months. The issue wasn’t so much that stocks would fall over the summer, but that they wouldn’t do a whole lot at all.

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As such the adage seems to have developed among professional traders who rely on volatility in order to turn profits. It was viewed as best to sell your stocks in May, sit the summer out, then re-enter the market when activity picked up again in September.

“It probably applies more to professionals than it does to retail investors,” says Chris Beauchamp, chief market analyst at IG Group. It is also evidently more applicable to a time when trading was conducted in-person.

All the same, many investors have taken the adage at face value over the years, which could potentially turn it into a self-fulfilling prophecy.

But 2025 has been a particularly bad year for proponents of ‘sell in May’.

Did ‘sell in May’ work in 2025?

In a word, no. While the adage often fails to deliver, “it rarely falls over as spectacularly as it has this year”, says Tom Stevenson, investment director at Fidelity International.

Major indices enjoyed encouraging returns between 30 May and 1 September. The FTSE 100 gained 4.8% during that period, while the S&P 500 gained 9.3%.

This largely reflects an uptick in investor sentiment following the chaotic fallout to Trump’s Liberation Day tariffs.

“Since Donald Trump’s U-turn on tariffs in early April, when he paused levies for 90 days a week after imposing them, shares have soared,” said Stevenson.

There is still time for a stock market wobble to vindicate ‘sell in May’ proponents before St Leger Day next week. “History shows they sometimes happen at this time of year,” says Stevenson. But otherwise, “investors will be celebrating a powerful summer rally” by the time the festival starts.

Do stock markets tend to underperform over the summer?

It’s questionable whether or not there’s any empirical evidence to support selling your shares in May. Various studies have looked into the results, and between them they paint a fairly blurred picture.

Fidelity International, for example, found that selling stocks in May generated positive returns in just 14 of the last 38 years. Investopedia investigated the trend going back to the 1930s and while it found that summers have generally yielded higher returns than winter since the 1950s, the opposite was true for the two decades before then.

Part of the problem is that each of these studies has a different basis – the exact months in question, for example, and how long we consider the “summer” to be. Some approaches divide the year into two six month chunks (November to April and May to October), but if you follow the old adage that references St Leger Day, you’d be out of the market for four and a half months at most.

It also depends on the particular stocks in question. The two studies above looked at different indices. Investopedia’s analysis found that while selling the Dow Jones index in May and switching to fixed-income investments over the summer produces superior returns, doing so with the S&P 500 yields the opposite.

Different sectors and national economies will display different patterns of seasonality regardless, so if your portfolio is weighted in any particular direction then this will also have an impact on summer returns.

Global market shifts can, as Beauchamp points out, happen at any time. While 2022-2024 were relatively good years for the “sell in May” strategy, anyone taking that approach in 2021 would have lost out, as markets rebounded with the post-Covid reopening that lifted markets.

There is some evidence that average returns are higher during the winter than they are in the summer. However, if your strategy involves selling in May then buying your shares back in September or October, the market has to have fallen – rather than just generate smaller returns than you got in the winter – in order for you to profit.

There’s far less evidence for that happening. A study from Manulife Investment Management in 2023 found that a buy-and-hold strategy beat selling in May over the preceding 10-, 20- and 50-year periods.

As Stevenson points out, the odds are stacked against ‘sell in May’ as a strategy given the tendency of stock markets to rise over time.

On that basis, time in the market, rather than timing the market, seems to be the more reliable (and easier) strategy.