IS IT TOO LATE TO SELL IN MAY AND GO AWAY?

Feel free to reach out to PSG Wealth Manager Schalk Louw directly.

As I write this on 29 April 2025, the FTSE/JSE All Share Index (JSE) is reaching new highs, despite having been down more than 10% from its peak earlier this month. In the United States, the situation is similarly volatile. The S&P 500 is currently trading about 10% below its highs from earlier this year, although that’s an improvement from the 15% decline seen earlier in April.

With all the uncertainty currently surrounding global markets, is “selling in May” actually sound advice this year? Or is it just a catchy old rhyme the media brings out every year to stir up some excitement?

I’ll answer that question shortly. But first, let’s look at what the data tells us.

Sell in May and go away?

• If you had sold your shares at the end of May every year since 1961 (i.e., for the past 64 years) and stayed out of the market until 31 December of each of those years, you would have lost out on 8.49% per year of the FTSE/JSE All Share’s annual return of 13.46% per year over this period.
• Statistically, this picture becomes even more interesting when over this 64-year period, you only have a look at the periods where the JSE was still trading in negative territory from the start of each of those years until the end of May of each of those years. Over this 64-year period, the JSE still traded in negative territory at the end of May 13 times, while we only saw a further decline from that point onwards three times. In fact, the average return in these 13 cases came to 17.4% over the following seven months.  
• Let’s take this statistic one step further: over this 64-year period, the market delivered 63% of its annual return between the end of May and December of each year and delivered positive returns close to 80% of the time.
• A few of you may point out that the saying is actually based on the idea that you should try to avoid the month of May completely, therefore selling before May, but again the data proves that this is nothing more than a myth. On the contrary, with an average return of 1% per May over the last 64 years, it has clearly not been the worst month to be invested. If you really must take a critical approach to this, you would find that June was actually the month to avoid, yielding an average return of only 0.14% over this 64-year period.

Table 1: Average FTSE/JSE All Share monthly return for each month between 1960 and 2022 (source: Iress & Refinitiv)

So, at an average return of 0.14% per June, it’s really difficult to justify a “sell in May” from a cost perspective. In short, the data surrounding selling May proved really interesting, but inconclusive.

What is the solution?

It may sound like a sales tactic and even a little like a cliché, but it’s not about timing the market, it’s about time itself.

Graph 1: Longer term trend of the FTSE/JSE All Share Index vs the MSCI World Index in Rand (source: Refinitiv)

Historically, the general trend in the stock market has been upward. Stock markets are trading at higher levels today than they were 10, 20, or even 50 years ago. For example, the FTSE/JSE All Share Index delivered a total return of 13.3% per year to investors over the past 27 years (from 29 April 1998 to 29 April 2025). This performance came despite significant global and local challenges, including the Russian financial crisis, the dot-com bubble burst, the 9/11 attacks followed by the wars in Afghanistan and Iraq, the 2008 global financial crisis, South Africa’s credit rating downgrades to junk status, the COVID-19 pandemic in 2020, and more recently, the Russia-Ukraine war.

However, this upward trend has not been smooth or uninterrupted. Market corrections—temporary declines in stock prices—are a natural part of investing, much like the changing of seasons is a natural part of life on Earth.

Don’t waste your energy losing sleep over things like “TARIFFS”. Likewise, don’t rely on old sayings or market myths. Rome wasn’t built in a day, and it’s equally unrealistic to expect to build a successful investment portfolio overnight—especially if it’s based on hearsay. Building lasting wealth takes time and patience.