‘Sell in May and go away’ isn’t working: strategist

Scott Gamm

The Wall Street adage ‘sell in May and go away’ isn’t holding up, at least not yet, according to Oppenheimer chief market strategist John Stolzfus.

“In the 13 weeks from the end of May through last Friday’s close the S&P 500 (^GSPC) managed to gain 6.34% in price (total return 6.87%) notwithstanding a slew of negatives,” wrote Stolzfus, in a note to clients on Tuesday.

The typical ‘sell in May and go away’ adage suggests that stocks typically underperform during the summer and that it might be best for investors to stay on the sidelines during this stretch.

To be fair, the adage rang true during the month of May, when the S&P 500 fell roughly 3% as President Trump threatened new tariffs on Mexico and investors started to fear that the Federal Reserve wasn’t open to cutting interest rates. These worries eventually faded as the Federal Reserve soon jumped on the rat-cut bandwagon and Trump quickly reversed the tariff threat against Mexico.

A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., September 3, 2019. REUTERS/Andrew Kelly

Lingering stock market worries

Still, some of the negatives that the market has faced since the end of May, per Stolzfus’ earlier point, are quite lengthy. He points to continued tweets about trade by Trump; China’s retaliation; the yield curve inversion, which started in August; recession fears and the roughly $17 trillion worth of negative-yielding government bonds across the globe.

“Now with the Northern Hemisphere’s summer behind us, professional investors will return from the Labor Day holiday weekend to parse the details of the latest ramp up in hostilities in the trade war after the U.S. added to its tariff regime and China quickly moved to retaliate with tariffs against U.S. good,” Stolzfus wrote.

The S&P 500 is up roughly 15.8% so far this year.

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Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.

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