Is Sell In May and Go Away Still Relevant?

It is May. Singapore just entered phase 2 “heighten alert”. I’m also at “heighten alert” right now. Some Gurus that I know have started to preach about “Sell In May and Go Away.” It is hilarious to think that such an age old advice wasn’t taken into context. Not taking advice into context is often the worse possible advice/bullshit in your financial journey.

Sell In May and Go Away

Sell In May and Go Away

Is Sell In May and Go Away still relevant?

Let’s take a look at history on how this sentence came into existence.

In the UK, aristocrats, merchants, and bankers usually would leave the city of London and escape to the countryside because summer was too hot. Summer in this case typically starts in May when the weather warms up. They will sell away their shares in May and enjoy their holiday in the countryside. As a result, there will be less volume in the market due to lower activity. In those times, it is not easy to monitor share price from far away. Hence, I believe that’s why they sold it in May.

In the US, investor also mimic the same behavior as they spend more time for vacation.

Fast forward to 2021, with the entire world mostly in a lockdown, semi lockdown state, there isn’t really a countryside to escape to. With digitalization, I believe that it is more easy than ever to monitor your positions in any countryside.

Hence, I really don’t think it is relevant in this age and time anymore

 

Final Thoughts By Wealthdojo

People will always rationalize things that happen with logic (could be flawed logic). In the current correction, it is easy to point conveniently to an existing phenomenon.

In my opinion, a correction is not due to low volume (as suggested above) but a high volume of selling activities. Hence, the suggestion of “Sell in May and Go Away” is false in explaining the current correction now.

Hope that this sets some context into investing.

May you invest with a strategic theme. Take care.

 

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

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The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

 

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