Sell in May and Go Away? Why Long-Term Investors Should Stay Put

The age-old adage “Sell in May and Go Away” has long tempted investors to flee the stock market each summer, promising protection from seasonal slumps. But is this strategy truly a reliable path to wealth? New data reveals that clinging to this mantra risks missing explosive gains, particularly in an era of volatile geopolitics and shifting economic tides. For long-term investors, history—and recent market action—argues strongly for staying fully invested.

The Myth of Seasonal Timing: A Historical Reality Check

The “Sell in May” hypothesis claims that stocks underperform from May to October, with better returns reserved for the November–April period. While there's some truth in averages, the strategy's flaws are glaring when viewed through the lens of compounding and missed opportunities.

From 1990 to 2023, the S&P 500 averaged 6.3% returns between November and April, versus 3% from May to October. Yet this 3.3% gap pales next to the risks of timing errors. For instance:
- In 2020, summer (May–October) returned 24%, while winter (November–April) fell -7.7% as markets rebounded from pandemic lows.
- In 2009, summer gains hit 21.9%, compared to winter's -9.4%.

Even over longer horizons, the math favors patience. A $100 investment in May–October periods since 1990 would grow to $249.33 by compounding returns—a stark rebuttal to the idea that summer is a “death zone.” As one analyst quipped: “Missing just a few key days can erase years of gains.”

The Cost of Timing: Fees, Taxes, and Missed Compounding

The “Sell in May” approach demands flawless execution—buying at the market's lows in November and selling at highs in May. Yet in practice, human emotions and transaction costs sabotage this ideal.

Consider a “perfect timer” investing $2,000 annually for 20 years:
- They'd amass $138,044 by timing the market flawlessly.
- A “buy-and-hold” investor would still reach $127,506—a margin too narrow to justify the risk of getting it wrong.

Meanwhile, fees eat away at returns. The Pacer CFRA-Stovall ETF (SZNE), designed to exploit seasonal trends, charges 0.60% annually—12 times the cost of a typical S&P 500 index fund. Over decades, this gap alone could wipe out any theoretical edge from timing.

2025's Market: A Case Against Summer Exodus

Recent data underscores the perils of following the “Sell in May” script.

In 2024, the S&P 500 swung between gains and losses from May to October, ending the period down 1% from its October high. Yet investors who fled in May missed a 2.28% August rally and a 1.99% September surge. Fast-forward to 2025:
- By May 31, the index had already rebounded 6.15% from April's dip, reaching 5,911.69.
- By July 7, it hit 6,229.98, just 0.8% below its July 3 all-time high of 6,279.35.

Even in volatile months like July 2025, where the index swung +40 points intraday, the broader trend remains upward. Exiting in May would have meant missing a 4.96% June surge and a 5.50% year-to-date gain by mid-2025.

Why Timing Fails: Markets Defy Predictions

Seasonal patterns are no match for macro forces. Elections, Fed policies, and geopolitical shocks—like Middle East tensions easing in June 2025—can override any “summer slump.” For instance:
- Post-election years since 1990 saw May–October returns hit 78% positive, versus 64% in non-election years.
- In April 2024, the S&P 500 rose 2.28%—a “strongest month” defying May's ominous reputation.

The Investor's Playbook: Stay, Diversify, and Compound

The evidence is clear:
1. Avoid timing the market. Even brief exits risk missing explosive rallies like 2020's summer rebound.
2. Focus on long-term compounding. A buy-and-hold strategy lets gains snowball, as seen in the $100→$249 example.
3. Diversify strategically. Rotate into defensive sectors (healthcare, utilities) during uncertainty, but stay invested.

For 2025, the advice is straightforward: Don't sell in May. The S&P 500's YTD resilience, proximity to all-time highs, and record market value ($52.5 trillion by June) signal a market primed for growth—not a retreat.

Final Verdict: Patience Pays

The “Sell in May” mantra is a relic of over-simplified thinking. In a world where geopolitical risks and Fed policies dominate, sticking to a disciplined, diversified buy-and-hold strategy is the surest path to long-term wealth. As the data shows: the market's ups and downs cancel out over time—but compounding never does.

Stay invested. Stay patient. Let time work for you.