Sell in May and Go Away?

Written by The Dividend Guy on May 1, 2007

The old adage goes that an investor should sell their holdings in May and go away until the fall when stock tend to pick up again. I think that this should be rephrased: A speculator should sell in May and go away, an investor should care less about this and just continue on with their current investment strategy (buying good quality dividend paying companies).

For investors, selling because of the time of year is irrelevant because we are looking much longer term (20 years +). These short terms swings in market momentum will become irrelevant in the long term and the friction costs (trading costs, spreads, etc) will eat away at a large percentage of any gains you may (or may not) realize from following this strategy.

I might suggest (although this has not been researched in any way by me) that the slow summer months may be a better time to buy. Contrarian investing says to go against the general consensus of the market - if no one is buying stocks in the summer then perhaps this is a good time to buy! Just a thought.


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6 Comments so far

  1. Latest Finance News » History » Sell in May and Go Away? May 1, 2007 9:20 pm

    […] Original post by The Dividend Guy […]

  2. finance girl May 2, 2007 10:04 am

    Totally agree; my buys are for, at a minimum, 5 years out, so it sure doesn’t apply to me!

  3. Corporate Verse May 2, 2007 8:45 pm

    A poem entitled: DON’T sell in May and go away!
    see:
    www.corporateverse.com

  4. Sabine S. May 5, 2007 2:11 pm

    I was very impressed with your blog. Please check out our new Dividend Calendar, at:
    http://sp500.us/dividends.php

    Our Dividend Calendar displays companies by their Ex-Dividend Date. You may also sub-sort the list by Stock Symbol, Company Name, Market Cap, Yield, Rate, or Payment Date.
    —————————————————————————————
    Please let me know if you can add a link to our Dividend Calendar on your home page. I will then add a link to your website, on a new webpage which will list all websites that link to our Dividend Calendar.

    Thank you,

    Sabine
    SP500.US

  5. Brandon J May 12, 2007 4:47 pm

    That’s definetly a good Warren Buffet philosophy. I don’t even really look at the “market” besides the S&P 500.

    I’m in the Air Force and I’ve created a blog to help military members with their finances and I wanted to know if we could exchange links. Thanks.

    Brandon J
    Money for Military
    http://moneyformilitary.blogspot.com

  6. Mo Donaldson May 29, 2007 10:02 am

    Leaders with Luster O’Shaughnessey would call your portfolio, but everybody and his dog on Wall Street are in them. And when you buy what everbody buys, you get what everybody gets. I follow a dividend strategy too, have my money invested in SFL, ONAV, PCU among others. Growing companies with growing dividends. Good luck with your investments

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