What is Sell in May and Go Away?

Sell in May and go away is a popular season trade strategy in the Stock market where the traders sell their assets shortly after 1st May and rebuy them after 31st October. This thought of selling the assets in May was introduced in the 1970s by a market strategist known as Alfred Fielding. He uncovered his method after his company went bankrupt in 1974.

As per this technique, the months between November and April are the best months for investments. So, as April ends, the investors can opt to sell their assets and wait till October to rebuy the assets back.

In simple terms, Sell in May and Go Away is a selling technique where the investor takes advantage of volatility in the market during May Month to make quick profits.

Though the term was introduced for the stock market, its adaptation is also present in the crypto market, highlighting a little correlation between these investment alternatives.

Is Sell in May and Go Away Work For Real?

Sell in May and go away makes a little sense because of the historical evidence, but there are better methods. From its introduction in 1974, a few years have followed this volatility pattern whereas the rest didn’t, creating mismatched opinions on the success of this strategy.

The best stock that backs up this theory is the S&P 500, listed by the Standard and Poorer’s ratings company. The S&P 500 performance from the 1960s revealed its return an average of 0.18% during May. For this stake, the summer months have performed less than the rest of the months, except July.

Also, Datatrek’s report has highlighted that S&P has a slower performance in these five months between May and October. However, there is only a slight decline in the performance, not a complete shutdown.

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Another example backing this method is the Dow Industrials, which has given an average gain of 1.9% ever since the 1950s. However, during these summer months, its average gains are around 0.8%, whereas from November to April, the gains are around 7.3%.

Does Sell in May and Go Away Stands True For Bitcoin?

Compared to the stock market, the influence of Sell in May and Go Away is lower for the cryptocurrency market. There have been a few years, where the market behaved according to this hypothesis. But for the majority of the years, the pattern stayed completely different.

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As per the cryptoverse data, Bitcoin price  followed the May fall in 2013, 2015, 2018, 2021, 2022, and 2023. But out of these, only 2021 and 2022 had a major fall, where returns declined by 35% and 15%. However, apart from 2021 and 2022, the remaining year’s losses were only minor, which can be ignored.

In the case remaining six years, the following months after May performed higher and even better than the rest of the months, completely disapproving of the idea of selling in May and going away.

A similar pattern to Bitcoin has been observed in the case of the overall market. The crypto market kind of mimics the Bitcoin behavior throughout the year.

Final Thoughts

Financial analysts have advised investors to focus on personal analyses instead of following the Sell in May and Go Away. It is because the strategy has its good and bad years and not every year follows this pattern. Even in history, the declining May month has also led to surging months of June, July, and so on. So, the chances are half and half of seeing similar results this year.

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