Does the Rhyming “Sell in May, Go Away” Work?

We evaluates the strategy’s benefits of leaving the market periodically with China equities.

Kate Lin, CAIA 06.05.2021
Facebook Twitter LinkedIn

Chinese calendar

The catchy rhyme of “Sell in May, Go Away” particularly appeals to people who trade on market noise. A common version of the “Sell in May, Go Away” strategy is to go to cash on May 1st, and then buy back into the market on November 1st. Ian Tam, Director of Investment Research at Morningstar Canada explains the logic like this: “During the Summer months as investors are less active, trading volumes fall, as does enthusiasm for the market and hence potential for gains.”

Experimenting with his approach in Asia, we picked two widely-tracked benchmarks – MSCI China and the Hang Seng Index – to this test if investors could dodge the ‘downtime’ between May and November, and gain on a short, medium and long-term basis, i.e. one month, one year and multiyear periods.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Member.

Register For Free
Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
CK Hutchison Holdings Ltd49.55 HKD1.43Rating
CLP Holdings Ltd76.55 HKD0.20Rating
HSBC Holdings PLC43.75 HKD1.86Rating

About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

© Copyright 2021 Morningstar Asia Ltd. All rights reserved.

Terms of Use        Privacy Policy