Mayday, Mayday

Mayday is just around the corner and the old adage of sell in May and go away needs to be addressed. Since 1896, the Dow Jones Industrial Average has a 1.7% annualized return for the period between May 15 and Halloween. The rest of the year the return has been 5.2% according the research team at Marketwatch.com.  So should you be pulling back as summer approaches? Not so fast. For the past 12 years, the buy and hold group has averaged 7.7% for the year and the sell in May group has had a 7.9% annual return. So at least as of the last dozen years, it has been better to own through the summer if you are trading within a taxable account. But if you are trading within a tax deferred account such as an IRA, or a non-taxed account like a ROTH, you might have a slight advantage following the old saying "sell in May and go away".