Should you sell in May and go away? Why market timing could cost you big

Markets defy seasonal expectations

While historical trends may suggest caution during summer months, real-world examples frequently defy this logic. Consider the summer of 2020—despite initial uncertainty amid the global pandemic, the S&P 500 rallied impressively, rewarding investors who stayed invested. Similarly, summers following sharp downturns have often witnessed dramatic recoveries, such as the post-financial crisis recovery in 2009. Another striking example was the summer following Brexit in 2016, when many expected prolonged turmoil but instead saw markets swiftly regain momentum. These examples emphasize the unpredictability and potential costs of seasonal market timing.

Moreover, market behavior is increasingly driven by fundamentals, macroeconomic factors, geopolitical events, and central bank policies, rather than historical seasonality. Investors who focus excessively on the calendar may overlook these crucial elements.

2025: Exceptional year or market noise?

This year, heightened volatility stemming from tariff disputes, geopolitical tensions, and inflation concerns could entice investors to follow the seasonal advice more closely. Yet, history has repeatedly shown that markets rarely follow neat seasonal scripts. Summer months often produce surprising rallies, catching seasonal traders off guard. Investors must remain cautious of narratives that overly simplify complex market dynamics.

The dangers of market timing

Legendary investor Warren Buffett cautions strongly against attempting to time markets, famously stating: “I never attempt to make money on the stock market. I buy on the assumption they could close the market tomorrow and not reopen for five years.” His longtime partner Charlie Munger adds succinctly: "The big money is not in buying and selling, but in waiting." Both reinforce the superiority of patience and discipline over short-term seasonal tactics.

Indeed, attempting to predict short-term market movements consistently proves challenging. Research repeatedly indicates that market timing strategies often result in subpar returns due to missed opportunities and transaction costs.

How to invest wisely beyond seasonal clichés

Investors typically fare better remaining invested consistently rather than attempting to predict short-term fluctuations. Markets often deliver significant gains in short, unpredictable bursts, meaning even brief market absences can seriously impact long-term returns.

Rather than rigidly adhering to seasonal patterns, investors should prioritize regular portfolio reviews, proper diversification across asset classes, and maintaining a disciplined long-term investment perspective. Strategies such as systematic monthly investing, also known as dollar-cost averaging, help manage market volatility, reduce emotional biases, and provide consistent portfolio growth.

Key lessons to keep in mind

• Historical trends exist but are not guaranteed.
• Market timing rarely succeeds: Long-term investments generally yield better results.
• Volatility and uncertainty are permanent market features—avoid impulsive decisions.
• Disciplined, consistent investing (e.g., monthly contributions) remains the most reliable strategy.
• Economic fundamentals and geopolitical factors often outweigh simple calendar-based strategies.

Ultimately, the "sell in May and go away" proverb has some statistical merit, but markets seldom adhere strictly to seasonal calendars. Successful investing prioritizes disciplined strategies and patience, not seasonal clichés. When in doubt, remember: the long-term investor who stays consistently invested usually enjoys the greatest reward.