Should you Sell in May? New research suggests investors should think twice before following this theory of market seasonality

Analysis from online investment platform Bestinvest by Evelyn Partners suggests investors should be wary of blindly following the old stock market adage “Sell in May and go away, come back again on St. Leger’s Day”, with new data showing the risks of missing out on dividends and potential summer rallies.

The well-worn saying has its roots not in hard financial logic about the dangers of summer markets, but in the social rhythms of a bygone era. It dates to a time when City stockbrokers would hang up their bowler hats and leave London for the summer to enjoy a calendar of elite sporting and social events known as “The Season”. This included Royal Ascot, Wimbledon, Henley Royal Regatta and Cowes Week, culminating with the St Leger Stakes in Doncaster in mid-September - —hence the fuller phrase: “Sell in May and go away, and come back on St Leger’s Day.”

This year, however, it might feel more resonant than usual for investors as concerns mounts that markets have been underestimating the medium and long-term impact of the Iran conflict and overestimating the earnings potential of the AI revolution. With some commentators warning of the risk of a correction, it’s understandable that some investors might feel nervy and ready to press the sell button.

Research conducted by Bestinvest, using data from Lipper, examined stock market performance over the past 50 years (1976–2025) across the MSCI United Kingdom Index, MSCI World Index and the S&P 500 Index during the period from the start of May through to mid-September.

The findings highlight that while UK equities have historically experienced a relatively high incidence of summer weakness, the case for systematically exiting the market is far from clear cut.

Over the past five decades, the MSCI United Kingdom Index recorded capital losses during the summer months in 24 out of the last 50 years - 48% of the time. However, when dividends are included, the number of loss-making summers falls significantly to 17 years, or 34% of the time. This underlines the importance dividends have long played in UK equities, where they have historically accounted for a substantial portion of total returns.

Bestinvest also analysed more severe downturns - market “corrections” of 10% or more. These occurred nine times over the period studied including one ‘bear market’ when the index declined by more than 20% (2002). While such episodes have tended to appear roughly twice per decade since the 1990s, notably there has not yet been a summer correction in the 2020s.

However, the data also shows that investors risk missing out on strong gains by stepping aside. The UK market delivered eight “soaring summers” - periods where returns exceeded 10% - or 10 when dividends are included. In other words, the likelihood of missing a bumper rally has historically been broadly similar to the chances of avoiding a sharp downturn. Notably, there has not been a standout summer rally since 2009, when the market rebounded sharply on a wave of money printing and emergency rate cuts in the wake of the global financial crisis.

Looking beyond the UK, the evidence for seasonal equity weakness during the summer is even less compelling. This matters because UK retail investors now typically take a far more global approach than they did in the past. The MSCI World Index fell in capital terms during the summer months in just 16 of the past 50 years (32% of the time), with a similar pattern observed for the S&P 500 index. Sharp corrections were also relatively rare globally, occurring only four times for the MSCI World and three times for the US market.

In contrast, strong summer performances have been more common internationally. The MSCI World Index delivered gains of 10% or more in ten of the last fifty years (12 including dividends), while the S&P 500 achieved this in 15 years – 30% of the time. This highlights the potential opportunity cost of sitting on the sidelines.

Jason Hollands, Managing Director of Bestinvest by Evelyn Partners, comments:

“‘Sell in May and go away’ is one of the most enduring clichés about the stock market, but its origins lie more in the former social habits of a bygone era that any robust investment principle.

“While UK equities have shown a tendency towards summer softness, this is far from a reliable or consistent pattern, and once dividends are factored in, the case for selling ahead of the summer becomes even weaker.

“Dividends are a crucial component of total returns in the UK market. Investors who exit during the summer risk missing dividend payments if they sell at the wrong time and these can make a meaningful difference to long-term performance. Don’t forget exiting the market may also involve deal costs and have potentially tax implications for those with investments outside of ISAs and pensions.

“More importantly, the data shows that stepping out of the market can be just as likely to mean missing out on strong gains as it is to help avoid summer losses. Over short periods markets can be unpredictable, reflecting sentiment and reacting to events. They do not run to a reliable seasonal timetable. Some of the best returns in the past have come during the very months investors may have thought they should stay away.

“Globally, the ‘Sell in May’ effect is even less evident. The US and broader world markets have historically shown fewer summer declines and more frequent strong rallies, reinforcing the importance of maintaining a diversified, long-term investment approach – and staying invested. The slightly different results we discovered compared to the UK market possibly reflect the very different make-up, as the UK has long had relatively high exposure to economically sensitive and cyclical sectors such as oil and gas and financial services.

“For most investors, trying to time the market based on seasonal trends is a risky strategy. Staying invested, maintaining diversification and focusing on long-term goals is likely to prove far more rewarding than attempting to second-guess short-term market movements.”