Sell In May and Go Away? - Nope!
Does selling equities in May really work?
You’ve heard it before:
“Sell in May and go away”
Like all these sayings I often think there’s some truth in them, after all, they must have come from somewhere…right??
So I decided to quickly test a few things using ChatGPT.
#1 Shorting 1000 shares of SPY at the beginning of May and closing at the end
#2 Shorting 1000 shares of SPY at the beginning of May and closing at the end of October (this is supposedly what the saying means…)
I uploaded monthly SPY data from 1993 to 2023 into ChatGPT, asked it the right questions, and here were the results:
Strategy 1: – $24k
Strategy 2: – $110k
Summary:
Blindly shorting is historically a bad idea… (I mean we kinda knew that, stock markets go up in the long run)
If you’re an investor, fidelity also showed how not being invested in the market during May would have limited your gains over the years:
https://www.fidelity.co.uk/
*Note, I didn’t double-check ChatGPT’s backtest, which you should if you were going to rely on it to trade with. I was just curious.
Sell in May and go away?
Well, for traders, historically it seems like a bad idea.
Will 2024 be any different?
Let’s leave the catchy phrases to CNBC and just trade price eh…