The old motto “sell in May and go away” might not be a great guideline this year.
Trade war, tax policy, and debt ceiling risks are skewing seasonal norms, analysts told BI.
May tends to outperform in a postelection year.
In a market dominated by shocking headlines and policy whiplash, seasonal mottos like the old favorite, “sell in May and go away,” might need a rethink.
After an unprecedented stretch of years for investors, marked by a pandemic, the highest inflation in four decades, and now a sweeping trade war, market strategists say seasonality has become much harder to predict.
“I don’t think seasonal norms will be as useful in such an uncertain policy environment,” Ross Mayfield, an investment strategist at Baird Wealth, told Business Insider. “The outcomes of the tariff, trade war, tax bill, and debt ceiling will have far more of an impact on returns than seasonal patterns.”
It became obvious before 2025 even began that trading this year might be off-kilter. Consider that the annual “Santa Claus rally” failed to manifest in December, as earlier gains in the S&P 500 led to a rare decline that month.
Meanwhile, April — typically one of the year’s three best-performing months — saw the S&P 500 fall 1.1% as tariff escalations sent volatility soaring and investors fleeing stocks.
“Sell in May and go away” is tried and true—LPL Financial says the adage can be traced to London as far back as 1776—and it reminds investors that the summer months tend to be slow for the market.
Since 1950, the six-month period between May and October has seen a mild gain of about 1.8%. This year, though, it’s anyone’s guess what could happen amid the trade war, a potential recession, and ongoing geopolitical strife.
“In a benign environment, you would expect to see your positive seasonal trends, but, especially after the last six weeks, who knows what we’re going to be talking about,” Bespoke Investment Group co-founder Paul Hickey told BI.
April showers, May flowers?
If historically strong months are flopping this year, then the summer may hold its own surprises, too.
“When it comes to markets, tariff uncertainty and monetary policy right now have the power to make it rain or part clouds into sunshine,” Adam Turnquist, LPL Financial’s chief technical strategist, wrote in late April.
To be sure, there are some positive catalysts that could occur in the “sell in May” window: trade deals are no longer just talk, and President Donald Trump’s promised pro-growth policies are expected to take center stage later in the year.
Yet, recession risk will continue to loom over investors, while other commentators warn that future trade deals are already priced in and won’t fuel more gains. In fact, Pepperstone’s Senior Research Strategist, Michael Brown, suggested that investors do listen to the May adage and sell into rallies.
“The balance of risks does tilt in favour of that saying ringing true this year, given the huge degree of trade uncertainty, chunky downside economic growth risks, and considering how the recent relative calm on the tariff front seems to have lulled investors into a bit of a false sense of security,” he wrote this month.
But recent years should give investors even more pause before trusting the usual seasonal indicators.
Mayfield told BI that stocks have been performing better in the six months between May and October lately, returning 4.6% over the last 10 years. In three of the last five years, this timeframe yielded double-digit gains.
That could be true this time around, given that an ultra-bullish market signal was triggered in late April. The Zweig Breadth Thrust indicator, which measures broad stock market participation in an ongoing rally, historically boosts the market through seasonal stagnation, the Leuthold Group wrote recently.
Meanwhile, data tracked by Carson Group’s chief market strategist Ryan Detrick found that buying in May has made more sense in recent years, and the month is especially strong in postelection years, he wrote, rising by 1.6% on average.
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