It was once believed that market volatility increased in the summer months because Wall Street traders took time off from their jobs, resulting in less liquidity and therefore greater volatility. However, in today’s exponentially larger and more automated global equities markets, these types of inefficiencies have largely become an artifact of history. May – and the following summer months have returned some nice returns, particularly in the past several years.

In related market lore, October holds the dubious distinction of being the month when the Panic of 1929 began, of “Black Monday” in 1987, the collapse of Long Term Capital in 1997, and the Great Recession of 2008, all of which caused disruption in the stock market.  Particularly in ’29 and ‘09, the declines were statistically so severe that they skewed market return data for the entire modern history of the US equities markets.

But if you’ve still clung to those misguided “Sell in (insert month) adages for the past few years, you missed out on some decent gains, and would have reduced or negated market returns for the entire calendar year.

Here are the returns of the S&P 500 from May – October 2017 (Up 7.8%) In fact, only 30% of the time between 2008-2018 has the S&P500 experienced negative returns over the period from May 1 – October 31. (2008, 2011, 2015) In four years over the same decade, the May 1 – October 31 S&P returns were greater than 7% (2009, 2013, 2014, 2017).  In fact, the months of May, June, July, August, and October have all had more positive months than negative over the period of time from 1928-2018.


Does this mean that the market is guaranteed to go up over the summer? In a word: NO. But, if the market does pull back, it won’t have anything to do with the calendar. Trying to time the market is notoriously difficult, if not impossible. It’s always better to just ride out volatility. Having the proper asset allocation and diversification within your portfolio means less anxiety when the market swoons – which hopefully allows you to enjoy YOUR summer.

Are you managing your retirement based on old wife’s tales? You would be amazed at how having sound investment management will not only improve your returns but help you sleep at night. Give us a call at Davis Capital Management. It may be time we talked.