This old adage has its roots in the London Financial District, it was not an American construct. However, American investors have borrowed, adopted the notion across the pond over time simply because it has been known to be [somewhat] effective. Statistically and over time this old adage has worked, [with some exceptions as nothing is 100%]. The fact is that observations suggest that the U.S. stock market will tend to have an upward bias during the period between November to April. Conversely, the U.S. stock market has exhibited more weakness and downside volatility during the period between May to say, October. If you were to ask those who do not make their living on Wall Street, “which month of the year is the worst to be long stocks?” They would undoubtedly answer, “October” because a couple high profile stock market crashes happened during the month of October, but this answer is incorrect. By far the worst month over time to own stocks has been the month of September. And still today, market returns during the month of September tend to be weakest here in the United States.

I really believe a confluence of factors come into play that shape the trading days during the Summer months beginning in June and ending through August and September. You have many people, all potential investors and/or financial industry workers who book vacation(s) this time of year which keeps them away from their ordinary office routines/activity. This is one major reason why trading volumes will tend to be lighter during the Summer months which have the effect of exacerbating any downside market volatility. On the contrary, new money flows into stocks tend to be stronger as we approach the end of each year and the beginning of a new one, that can explain some of the stock market’s upward bias during the months of say, November through April.

Looking out on our economy today, we are teetering on a significant slowdown the timing of which is quite compelling for heightened “uncertainty” going forward. And markets hate uncertainty. We have the yield spread on 2-10 year U.S. Treasury securities inverting, a very bad sign for the health of the economy going forward, while at the same time runaway inflation is causing the Federal Reserve to make some very difficult decisions – how to raise interest rates in a slowing economy. The fact is, the Federal Reserve is way, way behind the curve on hiking interest rates in this country. They still have short-term interest rates set @ nearly zero while inflationary pressures are running hot; U.S. inflation is arguably growing at a clip of 10% annually. Add all this to a President and Vice President that can’t speak or articulate a sentence past the 3rd grade level and God I’m so thankful that I don’t have to make investment decisions for others anymore… and if I’ve ever witnessed a “Sell in May and Go Away”, it’s this one!

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