From decades of American stock market experience comes the saying that one should sell in May and go away. It is May and we have experienced a tremendous run up in stock prices since March, 2020, so it seems a good time to examine this old adage.

There is a strong historical difference between the average returns for the six months of May through October of each year and those of November through April. From 1950 through 2016, The Stock Trader’s Almanac (Wiley,, 2018), the average Dow Jones 30 Industrials Index rose by .4 percent in the lackluster six months and 7.6 percent for the fall to spring time frame.

However, hope springs eternal and most years we are tempted to continue to slug it out in spite of the odds. But as the late, great trader/teacher, Christine “Candy” Schaap often said, Hope is not a trading strategy!

If you wish to put these odds in your favor, how do you do so? First, cull out your losing positions. Most major losses are to be taken more quickly and will not improve much during a weaker market climate. Second, in your tax sheltered accounts, take profits and move money into better income producing investments.

Most middle-class Americans’ wealth is held in 401k and IRA accounts. Even though there is no penalty (and now often no trading cost) for selling and reallocating your accounts, most do not because they do not know what to do or do not pay enough attention to spend the time on it.

In the 401k’s we manage through our Capital Maximizer program, we are reallocating this week and taking some risk off the table in view of the current changes in expectations of rising interest rates and what I will call general squirrelly-ness. Take for example the plan of T-Mobile plan which has thousands of new employee participants from the Sprint merger.

We have a client who is approaching retirement with about a half million dollars in the account. The plan was improved recently by the addition of T. Rowe Price mutual fund choices in addition to some Vanguard holdovers and individual best of class funds. Many large company retirement plans do not have a sufficient number of defensive choices in them, but the T-Mobile has four fixed income portfolios plus the T. Rowe Price Stable Value Fund.

In this case, we are taking 60 percent out of the stocks and dividing that equally between the Vanguard Inflation Protected Securities Fund and the aforementioned Stable Value Fund. The latter has earned a little more than 2 percent in the past twelve months while the Vanguard fund has made over 6.

Because stocks of the value style are beating those of the growth style this year by a wide margin, we are splitting the other 40 percent between the T. Rowe Price Equity Income and Mid Cap Value funds, the William Blair Small Cap Value and the Dodge & Cox International funds. For now, including some stock funds gives us the chance of making some money in those which appear to have the best opportunity to continue their current uptrends.

In your IRA’s you probably have many choices. I currently prefer the Inflation Protected bond funds followed by High Yield bond funds for defense. Just like Billy Bean transformed Major League Baseball by using statistical probabilities, you can improve your annual and long term rates of return by informed reallocation. But, as you well know, past performance is no guarantee of future results!