May is here. Tempted to sell your S&P 500 stocks and go away until November? You might be missing out on some strong gains.
Nine S&P 500 stocks — including Builders FirstSource, Jabil and Synopsys — are stellar performers during the infamous May-through-October period, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. All nine topped the S&P 500 in the six-month period in the past five years. What's more, they've all gained an average of 17% during the period, while the S&P 500 rose just 5% in that time.
"Should you sell this May? You should not, and you never should unless you are reliably able to predict the future," said Alex McGrath, chief investment officer for NorthEnd Private Wealth.
Sell S&P 500 In May?
Investors are understandably nervous when May rolls around. Skipping the S&P 500 from May until November has paid off in past years, says The Stock Trader's Almanac.
Simply investing in stocks from Nov. 1 to April 30 generated a 7.3% gain from 1950 based on the Dow Jones Industrial Average, the Almanac says. Compare that gain to the paltry ride of 0.8% from May 1 to Oct. 31 from 1950. Selling in May and going away is "still an eye-popping strategy," The Almanac says.
That said, there are important exceptions. Recently, the six-month period in question has been decent, returning 5.1% on average the past five years. Last year, the S&P 500 rose 1.7%. And it shot up 10.2% in the six months in 2021. That's not something to fear. But the S&P 500 did tumble 6.7% in 2022 in the May-to-October period.
Buy In May
When it comes to stellar S&P 500 stocks starting in May, Builders FirstSource is the champ. The building materials stock gained an average of 38.1% from May through October in the past five years. Even in 2022, when the S&P 500 fell apart in that time, Builders FirstSource remained flat. And in 2020, the stock soared nearly 76% from May through October.
Chipmaker Jabil is another stock you don't want to sell in May. It rose more than 27% in the period in the past five years. And just behind is chip gear maker is Synopsys, with an average gain in the period of 23.8%.
There's no guarantee these winners will stand out again this year starting in May. But they're proof of how costly completely leaving the market can be.
Don't Sell These In May
Top S&P 500 stocks from May through October in the past five years
| Company | Ticker | Avg. May-Oct. change |
|---|---|---|
| Builders FirstSource | 38.1% | |
| Jabil | 27.4% | |
| Synopsys | 23.8% | |
| Cintas | 23.1% | |
| KLA | 22.6% | |
| Old Dominion Freight Line | 22.0% | |
| Copart | 20.7% | |
| Martin Marietta Materials | 17.5% | |
| American International Group | 17.0% |
