What Is the Sell in May and Go Away Strategy?
"Sell in May and go away" is a well-known finance saying passed down through generations of traders and investors. It suggests that markets are likely to go down in late spring. But what is the story behind this phrase and can it be considered reliable advice for crypto portfolio holders?
Origins
The genesis of this phrase can be traced back to London's financial hub in the 18th century, where it was coined in the following poetic manner: 'Sell in May and go away, come back on St. Leger's Day.' This alludes to the balmy season from May to September, when affluent aristocrats indulge in leisurely pursuits. Consequently, business activity ebbs during these months, impacting asset value.
The actual state of affairs
Despite its historical basis supported by old observations, it is unlikely that this expression can be considered accurate today. At least, this is due to many things changing since then. It is also worth noting that this proverb focuses on the stock market and is not relevant to other asset classes such as cryptocurrencies.
The takeaway
Market conditions, economic factors, and global events can impact asset prices regardless of the time of year, rendering this seasonal model less reliable from the perspective of a sound investment strategy.
Contemporary market dynamics and technological advancements have diminished seasonal influence on liquidity and stability. As a result, relying exclusively on this simplistic adage may be imprudent and inadvisable.
Investors should adopt a more comprehensive approach and analysis that accounts for all conceivable factors and economic indicators. Nonetheless, you are now one legend richer.
Dmytro Litvinko
Author
Has been exploring the enigmas of the crypto industry since 2017, transforming them into accessible narratives. Relies on dark chocolate and nuts as a secret source of energy and inspiration.
