Sell in May and go away? Frankly I do not do that. It is not that I do not believe in the seasonality of the market, because I believe there is a certain seasonality to the market. There is support for this idea, because historically, the rise in the stock market between May and September is minimal at best, but the rise in the stock market between October and April is close to the long term rise in the market.
Because I will not sell everything in May does not mean I would not take advantage of the seasonality. The problem with market seasonality is that it is hard to apply it to a particular stock. Some types of stocks have their own seasonality. Some have their own relationship to the business cycle. Selling also involves fees and taxes. If I have a stock I want to hold for the long term, I will not sell it just because the market is underpricing or overpricing it.
However, if there is a stock I want to sell, or if there a future need for cash in one of my RRSP accounts, I look to sell in April or May. Since October is probably the worse month for market crashes, I look to buy something I want around October.
Also, being Canadian, we also have a bit of a run up in the markets to the end of the RRSP season for the 1st of March each year.
Don Vialoux is the Canadian name in market seasonality. He has a couple of websites. One called Timing the Market and the other one called Equity Clock . Don also writes for the G&M. See his columns in the Globe Investor at the G&M. Don talks about how and why the sell in May and go away is really a myth. See is G&M article on this subject.
Another person you might be interested to read Ron Meisels, President of Phases & Cycles Inc. He also writes in the Globe & Mail. See his articles at the G&M.
A site you might want to know about is the one for the Canadian Society of Technical Analysts at csta. Both Don Vialoux and Ron Meisels have belonged to or still belong to this organization.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.