Against the backdrop of coronavirus, should you ‘sell in May and go away’?

28 April 2020

With May just days away, it is that time of year when some investors invoke the old saying “sell in May and go away, don’t come back till St. Leger Day”, in a belief that summer months are often dangerous ones for stock markets and therefore a time to sit things out.

Against the backdrop of the sharp falls seen in markets year to date as investors have reacted to the severe economic damage caused by the coronavirus pandemic – with UK equities down -28.8% in capital terms since the start of the year – the merest notion that things could get worse over the next four months because of seasonal trends might fill most investors with dread.  

The origin of the saying itself has little to with market crashes and is rather more genteel in nature. It was a nod to an age when stockbrokers would hang up their bowler hats and leave the City for the summer to enjoy a slew of sporting and social events known as ‘The Season’. This calendar of events included Royal Ascot, Wimbledon, Henley Royal Regatta, Cowes Week and ended with the St Leger flat race in Doncaster in mid-September. With sporting events and large social gatherings now cancelled for the foreseeable future due to social distancing restrictions, being unable to get hold of a stockbroker or financial adviser because they are off quaffing champagne somewhere sunny should not be a problem.

But what of the claim that the summer markets are prone to weak returns?

Bestinvest, the online investment service for fund and share dealing, has analysed forty years of monthly data from the UK stock market (as measured by the MSCI United Kingdom Index) to put the theory to the test.

As the chart below shows, on average UK share price returns have been negative in May and June over the last forty years, dipping respectively by -0.24% and –0.40%, though overall it is September that stands out as the month that has fared worst with an average monthly decline of -1%.

When dividends – the cash pay-outs that companies choose to make to shareholders are factored in – the picture looks less gloomy for the summer months. On a total return basis, including dividends, average returns in May are positive overall but low (0.13%).

Of course “average” returns can be distorted by notable years and so Bestinvest also tested the regularity of when each month has seen share prices fall rather than gains. As the chart below shows, looking at forty years of data, on capital return basis, May and June do indeed stand-out as the two months where share prices have fallen more often than risen, respectively 52% of the time in May and 58% of the time in June. However, once dividends are included, the picture changes for May.

There is no doubt that there have been some really turbulent summers in the past for the stock market. However, as Bestinvest show in the table below, the number of times when the stock market has posted a double-digit loss for investors during May-August period have been more than matched by sizzling summers when shares surged by 10% or more over these months.

Summer Slumps


Total Return (incl. dividends)
















Sizzling Summers


Total Return (incl. dividends)























Jason Hollands, Managing Director of Bestinvest, commented: “While on the surface there is some evidence to support the general idea of market seasonality, in truth every year is different and returns can vary wildly. This year certainly isn’t shaping up to be a ‘normal’ year for the markets, so there is certainly no reason to expect markets to confirm to any general patterns of seasonality. 

“As the data suggests, the receipt of dividends in the summer is usually one good reason to remain invested, though this year a large number of companies – including all the major banks – have scrapped dividends altogether due to the uncertain outlook. However, unless you have a magic crystal ball to see into the near future, trying to predict whether markets might rise or fall over the next few months is just guess work. Selling up now when markets have already fallen so sharply since the start of the year, could simply result in crystallising losses. It is therefore far more sensible to focus on a reasonable time horizon.”

Hollands continued: “While the economic outlook is without doubt very gloomy, a lot of bad news has been priced into stock markets. Importantly, the level of stimulus packages announced by central banks and governments over the last several weeks is unprecedented in sale, far outstripping what we saw during the Global Financial Crisis. With so much new cash created to support the economy and the financial system, this strongly supports the case for investing in stock markets on a medium to longer-term view. With business models being tested to the limits, it is vital to focus on high quality companies that can withstand the challenging environment of 2020 and thrive again when the pandemic abates and the economy starts to recover.”

About Tilney

Tilney is a leading investment and financial planning group that builds on a heritage of more than 180 years.  Our clients are private investors, charities and professional intermediaries who trust us with over £23 billion of their assets. We offer a range of services including financial planning, investment management and advice and, through our Bestinvest service, a leading online platform for those who prefer to manage their own investments.

We have won numerous awards. Tilney has been awarded Best Conventional Advisory Service at the 2018 City of London Wealth Management Awards, Best Advisory Service in the 2015 City of London Wealth Management Awards; Investment Award – Cautious category in the Private Asset Management Awards; and Stockbroker of the Year, Execution-only Stockbroker of the Year and Self-select ISA Provider of the Year 2015, as voted by readers of the Financial Times and Investors Chronicle. Bestinvest was voted Best SIPP Provider and Best Fund Platform at the 2017 City of London Wealth Management Awards, Best Direct SIPP Provider at the Awards 2017, Best Stocks & Shares ISA Provider at the 2017 Shares Awards, as well as Best Self Select ISA Provider, Best Online/Execution-only Stockbroker and Best Investment Platform 2017 at the FT and Investors Chronicle Investment and Wealth Management Awards, as voted by readers of the FT and Investors Chronicle.

Headquartered in Mayfair, London, the Tilney Group employs over 1,000 staff across our network of 30 offices, enabling us to support clients with a local service throughout the UK.