Sell in May and Go Away? Why the Old Investing Adage Doesn’t Hold Up in 2026

Why It Matters

The shift away from the May‑sell rule signals that investors must prioritize macro‑economic catalysts and tax efficiency over outdated seasonality, reshaping portfolio timing strategies for 2026 and beyond.

Key Takeaways

• S&P May‑Oct average return 5.1% past 12 years
• April 2026 saw strongest S&P/Nasdaq gains since 2020
• Buy‑and‑hold outperformed “sell in May” by over 6× since 1976
• Oil supply concerns, not seasonality, drive current market moves
• Capital gains taxes can erode returns from May sales

Pulse Analysis

The classic "sell in May" mantra has long guided investors toward a summer lull, but recent data suggests the rule is losing relevance. LPL Financial’s review of market performance from 1950 onward confirms that the six‑month May‑October stretch historically produced modest gains—just 2.1% for the S&P 500. Yet the last dozen years have seen that average climb to 5.1%, reflecting a broader shift in market dynamics. As the S&P 500 and Nasdaq closed April with their strongest monthly gains since the pandemic‑era lows of 2020, analysts argue that seasonal patterns are being eclipsed by real‑time geopolitical and earnings catalysts.

Geopolitical tension in the Middle East, particularly oil flow disruptions through the Strait of Hormuz, is currently steering market sentiment more than any calendar effect. Investors are pricing in a probable U.S.–Iran peace deal, which has buoyed equities despite lingering volatility. Meanwhile, heavyweight tech and biotech firms—Apple, Roku, and Moderna—have posted better‑than‑expected first‑quarter results, bolstered by anticipated tariff refunds from the Trump administration. These fundamentals have helped lift the S&P 500, reinforcing the view that macro‑economic forces, not seasonality, are the primary market drivers this year.

Tax considerations further erode the appeal of a May sell‑off. Liquidating positions at market peaks can trigger sizable capital‑gains liabilities, diminishing net returns even if investors re‑enter later at comparable prices. A long‑term study by American Century Investments shows a $1,000 investment held from 1976 to 2025 would have grown to nearly $295,000 under a buy‑and‑hold strategy, versus just $46,000 for a "sell in May" approach. The evidence underscores that staying invested, while managing tax exposure, remains the more prudent path for most portfolios in 2026.