Should You Sell Stocks in May? Here's What History Says.

There's a season for everything, from wearing shorts or sweaters to eating peaches or oranges. The time of year is very likely to determine which one of these options you choose. And the idea of seasons even has its spot in the world of investing. As the old saying goes: "Sell in May and go away." This suggests that investors should sell stocks and avoid the market during the summer months -- this way, they won't face potential underperformance.

So, now, in the early days of May, is the perfect time to revisit this saying and consider if you really should take it seriously. Should you sell at least some of your stocks in May and/or avoid the market? Let's take a look at what history has to say.

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The S&P 500's performance this year

Before we get started, though, it's important to consider what's happened in the market so far this year. The S&P 500, following three years of gains, slipped in the first quarter amid a variety of headwinds. Investors worried about the overall economy and the pace of interest rate cuts, and the conflict in Iran created significant geopolitical uncertainty. On top of this, investors worried about the long-term revenue opportunity for companies developing and selling artificial intelligence (AI) products and services -- tech giants together aim to spend nearly $700 billion just this year, so investors looked for reassurance that revenue down the road would make this worthwhile.

All of this put pressure on growth stocks and, as a result, weighed down the major benchmarks. But last month, the overall situation brightened. A ceasefire in Iran made investors hopeful about an eventual peace agreement. And the latest earnings reports from tech players showed the strength of AI demand -- and suggested this would continue. As a result, stocks have rebounded, with the S&P 500 finishing the month of April with a 10% gain.

Now, let's consider whether you should follow the old saying and stay away from stocks in the month of May. The full adage is "Sell in May and go away, and come back on St. Leger's Day," and it dates back to London in the 19th century. Then, financial professionals would rush to the countryside to escape the heat, resulting in a decline in trading during the summer.

The average May return over 10 years

Does this hold true these days? While activity during certain days and weeks of summer may still be weaker than in other times of the year, this may not predictably deliver low returns. In fact, CNBC, citing the JPMorgan trading desk, reported that the S&P 500 has posted an average return of 1.5% in May over the past decade -- and a return of 1.9% in June.

And a look back at the past five years shows that the S&P 500 has increased during every month of May.

History suggests that May isn't a time to leave the market, but instead to remain present and benefit from a possible rally. Of course, it's important to keep in mind that these are statistical looks at what's happened in the past -- and though they may offer us an idea of what's likely, they don't take into account corporate and economic news or geopolitical events that could impact the direction of individual stocks or the entire market. So, while it's great to consider history as a general guide for what's possible, we shouldn't rely on it when making our investment decisions.

Now here's an even more important point: Whether the market rises or falls over a period of a month or a few months won't have much impact on your returns over the long term. So, if you're invested in quality companies with solid prospects, it's a waste of time and energy to shift in and out of these positions to potentially capture minimal short-term gains. Instead, the best strategy is to hold onto them for a number of years as their growth stories develop.

All of this means that you shouldn't operate any differently during the month of May than you would during another month: Instead of selling in May, it's a better idea to buy when opportunities arise and hold on for the long term.

JPMorgan Chase is an advertising partner of Motley Fool Money. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.