Does Wall Street Really Take a Summer Vacation, Too?


Everyone likes to take a summer break—including, apparently, traders. Or at least that's the premise behind the old investing adage, “Sell in May and go away.”

What does that even mean?

Basically, the pithy investing advice is based on an expectation that, during the summer(ish) market months of May through October, stocks don’t perform as well as they do from November through April.

Many speculate it has to do with typical American vacation plans peaking between Memorial Day and Labor Day: While the traders are away, their portfolios pretty much stay put, and the market follows suit. Then, supposedly, everyone gets back to work, and the market starts its strong churn again.

Well, is it true?

Surprisingly, there’s some supporting data. One widely referenced study on the phenomenon found that between 1980 and 1998, average returns for U.S. stocks are more than 5 percent higher between November and April than they are during the “summer” months.

Pretty convincing, right? Except you can find plenty of instances in which the fortune-cookie-esque dictum crumbles. For example, if you'd sold at the start of this May, you might be dismayed. According to Morningstar, Standard & Poor’s 500-stock index returned about 1.2 percent for the month—a healthy gain following lower returns in March and April.

Besides, following this strategy is “just good old fashioned timing the market,” says Natalie Colley, an analyst with Francis Financial in N.Y. “For the vast majority of investors, human nature makes it a very bad idea to utilize this type of strategy.”

What’s wrong with trying to time the market again?

The odds are never in your favor. Sure, you may be able to avoid some losses by selling before you expect the market to drop, but you also risk missing out on gains because you never know exactly when it'll head back up. “Timing the market is virtually impossible,” says wealth advisor Bradford Pine. “If it was that easy [to make money by selling in May and going away], everyone would be doing it.”

So remember your long-term investing strategy this summer—and ignore any seasonal market movements. “Losses that do occur in the summer months, or any time throughout the year, really, should not worry long-term investors,” Colley says, “because they will be offset by gains over an extended time horizon.”

acorns+cnbcacorns cnbc

Join Acorns


About Us

Learn More

Follow Us

All investments involve risk, including loss of principal. The contents presented herein are provided for general investment education and informational purposes only and do not constitute an offer to sell or a solicitation to buy any specific securities or engage in any particular investment strategy. Acorns is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.

Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. It is not possible to invest directly in an index.

Advisory services offered by Acorns Advisers, LLC (“Acorns Advisers”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Brokerage and custody services are provided to clients of Acorns Advisers by Acorns Securities, LLC (“Acorns Securities”), a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Acorns Pay, LLC (“Acorns Pay”) manages Acorns’s demand deposit and other banking products in partnership with Lincoln Savings Bank, a bank chartered under the laws of Iowa and member FDIC. Acorns Advisers, Acorns Securities, and Acorns Pay are subsidiaries of Acorns Grow Incorporated (collectively “Acorns”). “Acorns,” the Acorns logo and “Invest the Change” are registered trademarks of Acorns Grow Incorporated. Copyright © 2019 Acorns and/or its affiliates.

NBCUniversal and Comcast Ventures are investors in Acorns Grow Incorporated.