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"Sell in May and Go Away" 2026: Strategy, Myth, or Opportunity?

Every spring, the same advice starts circulating.

Sell in May and go away.

It sounds like something your uncle would say at a barbecue. But it keeps coming up in financial media, in Reddit threads, in investor newsletters — because it's based on something real. There's a measurable seasonal pattern in U.S. stock market returns.

The question isn't whether the pattern exists. It does. The question is: does it mean you should actually sell?

In 2026 — with a potential jobs report shock landing May 1, a historic Berkshire Annual Meeting on May 2, and a Fed that may or may not cut rates at its May 6–7 meeting — the seasonal calendar is colliding with some of the most significant market catalysts of the year.

Here's what the data actually says, and what a smarter approach looks like.

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Where Did "Sell in May" Come From?

The phrase has roots going back centuries to British aristocrats who would leave London for the summer, pause their business activities, and return in autumn. The saying was: "Sell in May and go away, and come back on St. Leger's Day" — referring to a September horse race.

In modern finance, the idea got formalized through academic research. The most widely cited study found that U.S. equities returned an average of roughly 7% from November through April versus approximately 1–2% from May through October over a multi-decade period.

That's a real gap. When finance academics find it, it generates papers. When financial media finds it, it generates headlines. When algorithmic traders find it, some of them actually implement it.

So the pattern is real. But the conclusion — therefore you should sell — is where things fall apart.

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The Full Data Picture (Not the Cherry-Picked Version)

Here's the part that usually gets left out of the "sell in May" articles:

May through October still generates positive returns most years.

It's not that markets fall in summer. They just tend to rise less than they do in winter. There's a difference between "worse returns" and "negative returns." Selling in May because summer returns are lower is like skipping lunch because it's not as good as dinner.

Let's look at recent years:

| Period | May–Oct Performance | |--------|-------------------| | 2020 | +19.7% (COVID recovery) | | 2021 | +13.3% | | 2022 | -12.4% (the one that validates the theory) | | 2023 | +15.2% | | 2024 | +11.8% |

If you had sold every May and bought back every November, you would have captured one good year (2022) at the cost of missing massive gains in 2020, 2021, 2023, and 2024.

The strategy works in bear markets. In bull markets, it's a disaster. And we usually don't know which we're in until it's over.

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What "Sell in May" Actually Costs You

Let's run through the real costs that seasonal market timing imposes on investors:

1. Capital gains taxes. Unless you're in a tax-advantaged account, every time you sell a profitable position you trigger a taxable event. In a taxable brokerage account, selling in May to buy back in November creates friction that compounds over years into significant wealth destruction. The tax drag alone often exceeds the modest seasonal advantage.

2. The re-entry problem. Timing the exit is only half the trade. You also have to time the re-entry. Plenty of investors who sold in May found themselves watching markets rally in June, July, and August — and hesitating to buy back at higher prices. They never got back in. Or they got back in at the wrong time anyway.

3. Disrupted compounding. Dividend investors know this acutely. Selling means you stop collecting dividends. If you own a stock yielding 4% and you're out for six months, you've given up approximately 2% in dividends alone — often more than the seasonal spread you were trying to capture.

4. Transaction costs. Spreads, commissions (even "commission-free" has spread cost), and slippage add up across a full portfolio.

The bottom line: The theoretical seasonal edge, even if it's real in averages, frequently gets eaten by the practical costs of implementing it.

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What the Sell-in-May Narrative Gets Right

To be fair, the underlying intuition isn't wrong — it's just applied incorrectly.

What's true: summer months tend to have lower liquidity and higher volatility relative to institutional activity. Congress recesses. Hedge fund managers vacation. Volume drops. In thin markets, news can move stocks more dramatically in either direction.

What's also true: some sectors genuinely underperform in summer. Retailers, travel stocks, and certain cyclicals have predictable seasonal patterns. Agricultural commodities have their own seasonality. If you're managing a concentrated sector portfolio, summer seasonality is relevant.

What's not true: the broad U.S. equity market predictably falls in summer. It doesn't. It slows down in average years. In strong bull markets, it keeps rising.

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The 2026-Specific Setup

This May, several factors are converging that make the "sell in May" narrative even shakier than usual:

Jobs Report (May 1): If the April jobs report shows continued labor market weakness, the Fed cut probability for May increases significantly. A rate cut would likely produce a strong rally — not the decline seasonal sellers are betting on.

Berkshire Annual Meeting (May 2): Warren Buffett doesn't sell in May. He's built Berkshire Hathaway's wealth by staying invested through every seasonal pattern, every panic, every talking head predicting a summer selloff. What he says at the annual meeting is far more relevant to your portfolio than what month it is.

FOMC Decision (May 6–7): Either the Fed cuts (likely rally) or holds (potential disappointment but priced-in by now). Neither outcome calls for panic selling before it happens.

The investors positioned to benefit most from May 2026 are the ones who ran the data, screened for quality at fair prices, and held through the noise.

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The Smarter Alternative: Graham Number Screening

If you're tempted to sell in May because you're worried about market risk, there's a better question to ask:

Are the stocks you own actually overvalued right now?

Not "is it May?" — but are these specific businesses trading above their intrinsic worth?

This is where the Graham Number becomes useful. Developed by Benjamin Graham, the formula uses a company's earnings per share and book value per share to calculate an approximate intrinsic value:

Graham Number = √(22.5 × EPS × Book Value Per Share)

Stocks trading significantly above their Graham Number carry real valuation risk — not because it's summer, but because the market has priced in optimistic assumptions that may not materialize.

A simple process:

1. Run a Graham Number screen on your current holdings
2. Identify positions trading more than 20–30% above their Graham Number
3. Consider trimming those — they're the ones with genuine overvaluation risk
4. Hold or add to positions trading at or below their Graham Number — those are the ones worth keeping through any season

This is evidence-based portfolio management. It uses the fundamental data on each specific business you own, not an arbitrary calendar rule that doesn't know anything about your portfolio.

You can run this screen right now at valueofstock.com/calculator. Plug in any stock's EPS and book value per share, get an instant Graham Number, and compare it to the current price. In about two minutes, you'll know whether each position has real valuation risk — or whether you're being spooked by a seasonal myth.

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What to Actually Do This May

Stop asking: "Should I sell in May?"

Start asking:

• Which of my current holdings are trading significantly above intrinsic value?
• Which are trading at a discount — and deserve more capital, not less?
• Am I holding any positions where the thesis has changed, regardless of what month it is?

The investors who have built real wealth over decades — Buffett, Munger, Graham himself — never made allocation decisions based on what month it was. They made them based on what businesses were worth, what they were priced at, and whether the margin of safety justified the risk.

Seasonality isn't nothing. But it's an afterthought when you're investing in quality businesses at fair or discounted prices.

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The Bottom Line

"Sell in May and Go Away" is a real pattern with real limitations and real costs to implement. The seasonal effect exists in the averages. It does not exist reliably in any individual year — and 2026 is shaping up to be one of those years where macro catalysts override the calendar completely.

The smarter move in May isn't to sell blindly. It's to screen your portfolio for actual overvaluation, hold quality positions with strong fundamentals, and let the seasonal noise wash over you while everyone else panics.

Run your Graham Number screen at valueofstock.com/calculator before you make any May decisions.

And if you want to go deeper on building a portfolio that doesn't need seasonal heroics to perform, Stockwise6 on Gumroad is the systematic value investing toolkit that covers everything from screening to position sizing to selling discipline.

The calendar is not your investing strategy. The fundamentals are.

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Harper Banks writes about value investing and fundamental analysis for Poor Man's Stocks. For weekly coverage of undervalued opportunities, subscribe to The Value Brief.