Have you ever found yourself tempted to follow the crowd when it comes to investing? Maybe you’ve overheard someone at a coffee shop whispering about “selling in May and going away,” as if it’s some golden rule of the stock market. I’ll admit, I’ve raised an eyebrow at these seasonal trading tips myself, wondering if there’s any truth to them. But after digging into the data and reflecting on decades of market behavior, I’m convinced these patterns are more myth than magic. Let’s unpack why chasing these so-called seasonal indicators might leave you with less in your portfolio—and what you should focus on instead.
The Allure and Pitfalls of Seasonal Trading
The stock market is a noisy place. Between the talking heads on TV, the endless stream of hot tips online, and the chatter about historical patterns, it’s easy to get sucked into the idea that there’s a “best time” to buy or sell. Seasonal trading strategies, like the infamous “Sell in May” adage, promise a shortcut to profits. The logic sounds simple: markets supposedly perform better from November to April, so you should cash out in spring and sit on the sidelines until fall. But does this hold up? Let’s take a closer look.
What Are Seasonal Trading Patterns?
Seasonal trading patterns are based on historical averages that suggest certain months or periods yield better returns. For example, data since 1950 shows the S&P 500 averages a 1.5% gain in April, making it one of the stronger months. The Dow Jones Industrial Average does even better, climbing 1.8% on average. Then there’s the “Best Six Months” theory, which claims stocks soar from November through April, only to limp along from May to October. Sounds promising, right? But here’s the catch: averages aren’t guarantees.
Historical patterns can be seductive, but they’re not a crystal ball.
– Veteran market strategist
This year, for instance, the S&P 500 is down about 1% in April, and the Dow is off by a hefty 3.5%. The Best Six Months? It’s been a bust, with the S&P 500 sitting 2.5% below its October close. If you’d followed the seasonal playbook, you’d be scratching your head right now. So, what’s going on?
The Best Six Months: Fact or Fiction?
The Best Six Months strategy hinges on a noticeable trend. Since 1950, the Dow has gained an average of 7.4% from November to April, compared to a measly 0.8% from May to October. The S&P 500 follows suit, with 7.1% versus 1.8% in those periods. That’s a gap worth noticing. But before you start setting calendar reminders to sell, consider this: these are averages, not rules carved in stone.
| Period | Dow Average Return | S&P 500 Average Return |
| November–April | 7.4% | 7.1% |
| May–October | 0.8% | 1.8% |
Here’s where it gets interesting. This pattern isn’t just a U.S. quirk—it’s global. Studies have found similar trends in 36 out of 37 developed and emerging markets, with Europe showing particularly strong seasonal effects. But why does this happen? Nobody’s cracked the code completely. Some point to an “optimism cycle,” where investors get starry-eyed at the start of a new year, only to grow cautious as months pass. Others suggest seasonal affective disorder (SAD) plays a role, with shorter days making investors more risk-averse, leading to less speculative trading.
I find the SAD theory intriguing. It’s almost poetic to think the length of daylight could sway billion-dollar markets. But even if there’s some truth to it, relying on these patterns is like betting on the weather to plan your wedding. It might work out, or it might pour.
When Seasonal Patterns Fail
What happens when the Best Six Months doesn’t deliver? This year’s a perfect example—both the Dow and S&P 500 are down for the November-to-April stretch. Historically, when this period flops, trouble often follows. Since 1950, the Dow has been negative in this window 16 times, and in 14 of those years, bear markets either started or continued. The exceptions? 2009 and 2020, when recoveries were already underway.
When the bullish season fails, other forces are usually at play, and they can dominate once the season ends.
– Market historian
Does this mean you should panic and sell everything? Hardly. The problem with reacting to a failed seasonal signal is that you’re still trying to time the market. And timing, as I’ve learned over years of watching markets, is a fool’s errand more often than not.
Why You Shouldn’t Trade on Seasonals
Here’s the million-dollar question: Should you base your investing strategy on seasonal patterns? My take—and I’m not alone here—is a resounding no. For starters, the “Sell in May” mantra isn’t as foolproof as it sounds. May has actually been positive in 9 of the last 10 years. If anything, maybe we should be talking about “Sell in June” instead, since the June-to-November period has averaged a lackluster 2.7% return since 1950.
But here’s the bigger issue: market timing, whether based on seasons or anything else, rarely beats a buy-and-hold approach. The stock market’s biggest gains often come in unpredictable bursts. Miss those days, and your portfolio takes a serious hit.
The Cost of Missing the Best Days
Let’s talk numbers. Imagine you invested $1,000 in the S&P 500 back in 1970 and left it there through August 2019. Your money would’ve grown to $138,908. Not bad, right? Now, what if you missed just the best 5 days in those 50 years? Your return drops to $90,171—a 35% haircut. Miss the best 15 days, and you’re down to $52,246. Skip the top 25 days, and you’re left with a measly $32,763.
| Scenario | Return on $1,000 (1970–2019) |
| Full Period | $138,908 |
| Missing Best 5 Days | $90,171 |
| Missing Best 15 Days | $52,246 |
| Missing Best 25 Days | $32,763 |
These numbers hit me hard the first time I saw them. The kicker? Nobody knows when those best days will happen. They could be in May, October, or even a random Tuesday in February. Trying to dodge the market based on seasonal patterns risks missing these game-changing moments.
What About Parking Your Money Elsewhere?
Okay, let’s say you do “sell in May” and pull your money out. Where does it go? Treasury bills? Cash under your mattress? Here’s the problem: even the S&P 500’s weaker May-to-October returns have historically outperformed Treasury bills. So, you’re not just missing potential gains—you’re likely losing ground after inflation and taxes. As one financial researcher put it, staying invested is “clearly the better bet” when you crunch the numbers.
A Smarter Way to Invest
So, if seasonal trading is a trap, what should you do? In my experience, the answer lies in discipline, not chasing trends. Here’s how to build a strategy that stands the test of time:
- Have a Plan: Know your goals, whether it’s retirement, buying a home, or building wealth. Your plan should guide every decision.
- Understand Your Risk Tolerance: Can you handle a 20% drop without losing sleep? Be honest with yourself.
- Stay Diversified: Spread your investments across stocks, bonds, and other assets to cushion the blows.
- Stick to It: Markets will test your resolve. Don’t let short-term noise derail your long-term vision.
I’ve seen too many investors get burned trying to outsmart the market. The truth is, the market doesn’t care about your calendar or your hunches. It rewards those who stay in the game, not those who try to time their exits.
The Psychology Behind the Hype
Why do seasonal trading myths persist? It’s not just about the data—it’s about us. Humans love patterns. We see them in the stars, in our daily routines, and yes, in stock charts. There’s something comforting about believing we can predict the unpredictable. But the market is a chaotic beast, driven by countless factors—economic data, corporate earnings, global events, and even investor moods.
Perhaps the most interesting aspect is how these myths feed into our need for control. Following a seasonal strategy feels like taking charge, but it’s often just chasing shadows. Real control comes from focusing on what you can influence: your savings rate, your asset allocation, your patience.
The market is a mirror of human nature—full of hope, fear, and occasional folly.
– Investment advisor
Lessons From a Lifetime in Markets
After years of watching markets ebb and flow, I’ve come to a simple conclusion: investing isn’t about being clever; it’s about being consistent. Seasonal patterns might make for interesting cocktail party chatter, but they’re not a strategy. The data tells us that staying invested, through the ups and downs, delivers the best results over time.
Think of investing like planting a tree. You don’t dig it up every spring to check the roots—you water it, give it time, and let it grow. The same goes for your portfolio. Focus on the big picture, tune out the noise, and trust that time is your ally.
- Build a diversified portfolio aligned with your goals.
- Rebalance periodically to stay on track.
- Ignore the urge to time the market, whether it’s May or any other month.
Next time you hear someone touting “Sell in May,” smile politely and keep your eyes on the long game. Your future self will thank you.
So, what’s the takeaway? Seasonal trading patterns are a fascinating piece of market lore, but they’re not your ticket to riches. The stock market is too unpredictable, too driven by human emotion and unexpected events, to be tamed by a calendar. Instead of trying to outguess the market, focus on building a solid, diversified portfolio and sticking with it. That’s not just my opinion—it’s what the numbers have been telling us for decades.
Have you ever been tempted by a market-timing strategy? Maybe you’ve got a story about a time you tried to follow a seasonal pattern—or ignored one and came out ahead. Either way, the lesson is clear: in investing, patience and discipline beat clever tricks every time.
