Definition of sell in May and go away principle

This refers to the historical underperformance of stocks in May to October in relation to the November to April period. The May to October weakness does not necessarily occur every year. Likewise stock markets do not always experience strength from November to April.

Historical evidence has shown that the May to October period represents a relatively weak semi-annual period for the stock market on average (but not every year), while the November to April period is a relatively strong semi-annual period for the stock market.

If an investor had followed the Wall Street axiom of “sell in May and go away” consistently, patiently and with discipline in the long run, s/he would have profited handsomely over the last 50 years. While this effect was first noticed in the U.S., it also holds true for Europe and Canada. [1]

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