(BFM Stock Exchange) – Among these injunctions that make the Folklore of the Stock Exchange is the famous “Sell in May and Go Away” or “Sell in May and go” in the language of Molière. Historical data reveal that the most efficient period, on average, extends from November to April. Should this venerable stock market adage be blinded? Not so sure according to specialists.

As every month of May, the favorite adage of scholarship holders “Sell in May and Go Away” resurfaces. The oldest mention of this saying was noted in an edition of 1935 of Financial Timesthe article already presenting him as “an old adage”. The most likely hypothesis would be that the wealthy classes left London for the countryside in fine weather by abandoning their wallets (or at least by intervening only episodically during this period).

The belief therefore wants that it is advisable to abstain on the stock market as of May 1 before reinvesting from the day before November 1 and therefore on Halloween day. This last day also has its effect on the markets. It is the Halloween Effect or “Halloween effect” in French which implies that the period from November to April offers the highest potential of increase in the financial markets.

A stock market

And in early May, the question naturally comes back to the fore. Especially after a month of April when the CAC 40 lost just over 2.5%, shaken by the shock wave caused by Donald Trump and his “reciprocal” customs duties.

Several factors tend to validate the theory of “Sell in May and Go Away”. Two academics, specialized in seasonality issues, tested the effect “Halloween/Sell in May” on the most important sample ever collected, and their conclusion is clear: investing in Halloween and taking its profits in May reports 4% more than a strategy consisting in indefinitely holding its titles.

Professors Zhang Yi of the Nottingham University Business School (China) and Ben Jacobsen by Tias Business School (Netherlands) retained a sample which began in 1693 with the London Stock Exchange and included clues to the most recent Rwandan market in 2013, or 114 markets in total and more than 63,000 months of stock market performance Peel … and the result is surprising by its magnitude since they have only identified one market – the Mauritius grant – presenting a higher yield over the summer period during the summer period during the summer period during the summer period during the summer period during the summer period

Zhang and Jacobsen’s study presumes that this effect corresponding to the taking of summer leave is still at work today. Especially since the seasonality of Halloween Indicator is more marked in Europe and the United States, where the habit of taking a vacation in summer is more widespread than in the rest of the world.

At first glance, this seasonality of the performance of stock market indices tends to be confirmed, advances Deutsche Bank. The German bank teams have tested several hypotheses based on an investment on the STOXX Europe 600 pan -European index since 1987.

“From 1987 to today, the strategy [sell in may] would have generated an annualized performance of 9 % against only 7.4 % for the Buy and Hold strategy (buy and keep). The difference in cumulative performance would be 1.182 %, “noted the strategists of the German bank.

A strategy that has its limits

Historical data therefore tends to validate the veracity of this adage. “But do not be fooled by cumulative performance,” warn Deutsche Bank specialists, who come to deconstruct this famous stock market adage for the third consecutive year.

The “Sell in May” strategy would have been less paid 24 times out of 38 than simply buy and then keep your titles.

Deutsche Bank assumed to sell the Stoxx 600 at the end of April and reinvest in early September, as the adage advocates it. “For this statement to be true, it would be necessary to hope that the exceptional performance of European equity markets in 1998, 2001, and 2002 will happen again,” notes Deutsche Bank.

This strategy worked with an outperformance of 29% in 2022, 28% in 1998 and 23% in 2001. “If we do not take these years into account, the strategy is less efficient than a simple purchasing strategy and keep,” notes Deutsche Bank.

And in the past 10 years, this strategy of selling in May to return in September has not been to the advantage of the investor seven times out of 10. For example, an investor who would have followed this stricto Sensu adage would have accused a loss of 1.6 % over the entire year 2024. “The seasonality of the equity markets is overestimated,” they abound.

Deutsche Bank has taken another hypothesis that shares in May and then investing in European state bonds would increase the probability of outperforming the market.

You might as well “pull with battery or face”

In the rear view mirror, this strategy seems even more promising, quips the German bank. “From 1998 to 2024, the” Sell in May “strategy with bonds would have generated an annualized performance of 11.0%, surpassing both a standard” Buy and Hold “strategy (6.4% per year) and the Sell in May strategy with liquidity (9.2% per year). But again, the success rate of the strategy would have been very disappointing. Buy and hold strategy that 13 years out of 27, “dissect strategists.

The conclusions of specialists from the German bank are final: “You can sell in May, but you could just as well shoot in battery or your chances of success would be the same,” they ironize.

Deutsche Bank also looks at the veracity of this adage on the American markets, and in particular on the S&P 500. “Since 1973, the” Sell in May “strategy with liquidity would have given an annualized performance of 9.2 %, while a” Buy and Hold “strategy would have reported 10 % per year”, notes the German bank.

“The success rate in the United States would be even worse than in Europe: the strategy will have only worked for 22 of the last 52 years,” deplores the study.

“In 2024, American shares recorded a performance of 10% between May and September, while US treasury bills only reported 6% in summer months. Consequently, the SELL in May strategy would have underperformed 4% compared to a Buy and Hold strategy last year,” concludes Deutsche Bank.

In summary, should we “sell in May and leave”? “Probably not, if we believe the historical data, because there can be better options if you are an active investor. If you are a long -term investor, more important factors should influence your investment decisions,” said Fidelity.