Sell in May and Go Away?

Apr 28, 2021

Brijesh Bhatia, Research analyst

You may have heard this famous market phrase, 'Sell in May and Go Away'.

It means you should sell your stocks in May because the month is considered to be bad for the bulls.

But is it true?

Does it hold in the Indian stock market?

Find out in this video...

'Sell in May and Go Away'. Well, this concept very much famous in the western world.

But what do the stats say about this. In this video, we will be covering more of this stats of last 25 years of data of Dow Jones, Nifty, and DAX.

Before starting the video, I request you to click on this of subscribe button and do comment on the videos so that we get your feedback. Myself Brijesh Bhatia senior research analyst and editor at Equitymaster.

So if you look at the first, Dow Jones, over here, last 25 years since 1996-2020 and if I look at the average return, it's been flat.

Month on month for May, this is the stats which I'm seeing for May and not only May, in this video I will be covering for next three months as well.

So if you look at May, sell in May and go away but the stats, for Dow Jones in May is very much flat, with 0.001%.

At the same time, if I look at the Nifty average of last 25 years for the month of May, it's very much surprised, with the gain of around 0.77% and the DAX with around 0.36% positive.

So sell in May and go away doesn't work for most people. If you look at the Nifty historic returns for last 25 years, out of that, 12 months have been positive returns verses 13 have been negative for Nifty, and at the same time, for the Dow Jones, 14 months has been positive versus 11 negative.

So it clearly says that it's been mixed positive and negative for Nifty as well as for Dow Jones and the DAX, it's around 13 positive versus 12 negatives.

What has the highest trends shown on the positive months? So if you look at the Nifty, it has shown 28% positive once during last 25 months and at the same time, the maximum negative returns or maximum down side it has shown was around 17%.

So I think looking at the stats, sell in May and go away for Nifty doesn't seems to be convincing for me. Comparing with the Dow Jones it's slightly flatter but even if we look at the momentum in the last 14 years, it has been on the positive side.

Not only that. If we look at sell in May and go away, most of the unwinding has been witnessed in, how do the next three months perform?

So if you look at the screen over here of the Dow Jones, the returns has been a negative 0.2% for June. In July, 1% positive. August slightly 0.7% negative.

So there's not much change. If we look at the month on month, July has been 17 months on a positive site, June has been 12 months and August has been 14 months. So it seems, it doesn't work very well for the following months as well.

At the same time, if I just look at the Nifty, 16 months out of 25, June and July has been positive versus 14 for August. So the returns have been positive 1.5%, 1.5%, and 0.4% respectively for June, July, and August.

So here the stats doesn't say that sell in May and go away. So this was just a video to show that the concept of western world doesn't replicate very well in the Nifty.

I hope this will be very much beneficial for you when you read that 'Sell in May and Go Away', works for the Nifty or not. So these are the stats just to show you.

Signing off. Thank you. Brijesh Bhatia.

Warm regards,

Brijesh Bhatia
Brijesh Bhatia
Research Analyst, Fast Profit Report
Equitymaster Agora Research Private Limited (Research Analyst)

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1 Responses to "Sell in May and Go Away?"

Vivek Malekar

Apr 28, 2021

Sell in May & Go Away was a good input. However, it would be more meaningful to find out as to what is the NIFTY retrun in 3 -4 months ( May, June, July, Aug) is last 25 months when previous month has performed in a perticular fashion. e.g. return in June if May returns in that year was above certain threshhold ( lets say 12%+)

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