Should you sell in May and go away? Why market timing can cost more than you think

That is worth knowing. It means seasonality can describe market weather. But it does not tell you exactly when to leave the house.

The problem is variation and the recent picture is less tidy. Reuters also found that, over the past decade, the May-to-October period returned about 7% on average, including a 22.1% gain in 2025.  In other words, the “bad” months have often been rather good. Markets can be rude like that.

The 2026 backdrop also complicates the picture. It is a US midterm election year, and Reuters notes that in five of the last 10 midterm years, the S&P 500 declined from May to October, with an average loss of about 1.5%. That is a reason for risk awareness. It is not a reason to confuse the calendar with a smoke alarm.

The real cost is missing the rebound

Market timing sounds sensible because it promises control. Sell before trouble, buy back after trouble. Easy, except for the minor issue that nobody rings a bell at either moment.

The biggest risk is missing strong days. Market rebounds often arrive quickly, usually when the headlines still look unpleasant. That is why long-term investors can damage returns by stepping out and waiting for “clarity”. Clarity is expensive. By the time everyone feels calm, prices may already have moved.

J.P. Morgan Asset Management research shows that staying fully invested in the S&P 500 over the last 20 years delivered far stronger annualised returns than missing just the 10 best days. The exact numbers change with the period studied, but the lesson does not: a small number of good days can do a large amount of work.

This matters for investors because most portfolios are built for goals, not seasons. Retirement, education savings, house deposits and long-term wealth building do not run on a May to October schedule. They need time, diversification and behaviour that survives bad headlines. That does not mean doing nothing. It means doing the right kind of something.

2026 is a review moment, not an exit signal

The current market has real risks. US equities sit near record highs. AI-linked shares have carried a large part of the enthusiasm. Oil prices remain elevated as geopolitical risks keep inflation worries alive.

Corporate earnings have been strong, but the bar is now higher. At the same time, market sentiment remains fragile, and the rally has been relatively narrow. Investors still like the story, but it is being carried by a small group of heavy lifters. That is the useful message for 2026. The issue is not whether May is dangerous. The issue is whether a portfolio has become too dependent on one market, one theme or one outcome.

A long-term investor can use May as a check-up. Are shares still aligned with the time horizon? Is the portfolio too concentrated in US technology? Is there enough exposure to other regions, sectors or asset classes? Is there cash for near-term needs, so market volatility does not force bad selling? That is more practical than disappearing for the summer and hoping September sends an invitation.

Risks to watch

The first risk is inflation. If oil prices stay high, transport, energy and production costs can rise again. That could make central banks less comfortable cutting interest rates. Investors should watch oil prices, bond yields and inflation releases.

The second risk is narrow leadership. If only a handful of AI and mega-cap technology stocks drive the market, index gains may hide weakness underneath. Watch market breadth, which simply means how many stocks are participating in the rally.

The third risk is complacency. Record highs can make investors feel safer than they are. Valuation matters more when expectations are already warm. A good company can still be a poor investment if too much optimism is already priced in.

Investor playbook

• Review concentration. Check whether one region, sector or theme now dominates the portfolio.

• Rebalance gradually. Bring positions back toward target weights instead of making all-or-nothing moves.

• Keep cash matched to needs. Money needed soon should not depend on summer market behaviour.

• Use regular investing. Monthly contributions can reduce the pressure to pick the perfect entry point.

A rhyme is not a strategy

The old rhyme survives because it is catchy. That does not make it a strategy. In 2026, “sell in May and go away” is best treated as a reminder to check risk, not a command to abandon the market. Seasonality can inform investors, but discipline, diversification and time usually do more of the heavy lifting. The calendar may whisper. A long-term plan should speak louder.

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