May to October is historically the weakest months in the market. Since 1896, the Dow (index of 30 largest companies in the US) had an average return of: 5.2% (Nov-April) and 2.1% (May-Oct).

This led to the old saying — sell in May and go away. But how has that worked out in 2021? Terribly.

Investors would have missed out on an 8% rise in the S&P 500 since May 1 if they sold. Record non-stop retail buying helped send the market to record highs.

• According to JPMorgan, in each of the past 3 months, US retail investors bought a net $10b plus worth of stocks and ETFs.
• As long as people continue buying, the market will keep rising. But if money starts coming out, then investors should be worried.

But with unemployment benefits ending and a fourth stimulus check unlikely, the net buying of stocks may have peaked.

Should investors sell during the summer? Revisiting some advice from Jonathan Golub of Credit Suisse (via CNBC):

• “Any investment strategy that you can summarize in a rhyme is probably a bad strategy”.
• Golub also argues that the best strategy is to keep capital exposed to the market year in and out.