If one has been investing in ASX 200 shares for long enough, one might come across the phrase 'sell in May and go away'.
This idiom is built upon the assumption that the months that follow May are typically ones that don't bode well for ASX shares and the share market. Thus, it's best to 'sell in May', ride out the annual winter storm, and buy back in at a later date. Perhaps this was the inspiration behind Green Day's 'Wake me up when September ends'.
Well, as most of us should be aware of, it happens to be right smack bang in the middle of May right now. So should investors take the hint and sell on masse today?
This idiom has been around for a long time. So let's test it out and see if it measures up by looking at what has happened with the S&P/ASX 200 Index (ASX: XJO) after the month of May in years gone by. Perhaps we can definitely prove if May is indeed the correct time to 'go to cash' for a while.
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Should ASX 200 investors just 'sell in May and go away'?
Since May is allegedly the time to sell, we'll analyse the ASX 200's historical performance between 31 May and 30 September. That last date comes from the full expression – 'sell in May and go away, come back on St. Leger's Day'. St. Leger's Day refers to a famous horse race in England, which usually occurs at the end of every September.
Let's kick things off. In 2022, the ASX 200 closed at 7,211.2 points on 31 May and recorded a value of 6,474.2 points on 30 September. That certainly would have been a good period to heed the creed.
On 31 May 2021, the ASX 200 finished up at 7,161.6 points at the end of May. By the end of September, the index was at 7,332.2 points. Not quite as rewarding for the 'sell in May' crowd.
2020 saw the ASX 200 round out May at 5,755.7 points, only to rise to 5,815.9 points by 30 September. Again, not a good year to cash out of ASX 200 shares in Autumn.
Pre-COVID 2019 saw a similar result, with the ASX 200 rising from 6,396.9 points to 6,688.3 points between May and September.
Finally, let's check out 2018. So five years ago, the ASX 200 concluded May at 6,011.9 points, only to rise to 6,207.6 points by the end of September.
So we have just one May out of the past five where it was worth 'going away', and four where the adage did not live up to its promise. The results are summarised below:
| Year | ASX 200 on 31 May | ASX 200 on 30 September | Gain/Loss |
| 2022 | 7,211.2 | 6,474.2 | (10.22%) |
| 2021 | 7,161.6 | 7,332.2 | 2.38% |
| 2020 | 5,755.7 | 5,815.9 | 1.05% |
| 2019 | 6,396.9 | 6,688.3 | 4.56% |
| 2018 | 6,011.9 | 6,207.6 | 3.26% |
Foolish takeaway
Looking at the data, we can clearly see that the 'sell in May and go away' idiom is, to put it scientifically, a load of hot garbage. At least for ASX shares. The reality is that any investor who followed this 'wisdom' would have been worse off for four out of the past five years. It just goes to show that there are no easy fixes or 'get rich quick' hacks on the share market.
It will be interesting to see what this year's May to September period throws up for ASX 200 shares. But I certainly won't be selling anything on 31 May 2023.
