Sell in May and Go Away: Does It Matter for Australian Investors in 2025?

The saying 'Sell in May and Go Away' has its roots in British financial history, where the summer months often saw reduced trading activity as many investors left London for holidays. Over time, this idea spread globally, including to Australia, where it’s sometimes cited as a reason to step back from the share market during the cooler months.

The basic premise is that share markets tend to underperform between May and October compared to the rest of the year. However, this pattern has become less predictable over time, especially as globalisation and technology have changed how markets operate.

Looking at recent years, the Australian share market has not consistently followed the old seasonal pattern. While there have been periods where May to October returns were lower, there have also been years where these months delivered strong gains. Several factors have contributed to this shift:

• Global influences: Australian markets are now closely tied to global events, such as changes in US interest rates, geopolitical developments, and international economic trends. These factors can drive market movements at any time of year.

• Year-round trading: The rise of online trading platforms has made it easier for both professional and retail investors to trade throughout the year, increasing activity even during traditionally quieter months.

• Policy changes: Adjustments to tax rules and investment regulations, including those affecting capital gains tax and superannuation, have made frequent seasonal trading less appealing for many investors.

Recent years have shown that market performance is more likely to be influenced by economic news, company results, and global developments than by the calendar alone. For example, both 2023 and 2024 saw positive returns on the ASX during the May–October period, challenging the idea that these months are always weaker.

For most Australians, relying on 'Sell in May and Go Away' as an investment strategy is unlikely to deliver consistent results. Here’s why:

• Missed opportunities: Stepping out of the market for several months can mean missing out on potential rebounds, dividend payments, and important company announcements. Many Australian companies release full-year results and dividends during the winter months.

• Transaction costs: Even with lower brokerage fees, frequent buying and selling can eat into your returns. Changes to capital gains tax rules in recent years have also made short-term trading less attractive for many investors.

• Superannuation considerations: For most Australians, superannuation is their largest investment. Super funds typically maintain a long-term, diversified approach and do not attempt to time the market based on seasonal trends.

• Market timing challenges: Accurately predicting the best times to enter and exit the market is extremely difficult. Many studies have shown that staying invested through market ups and downs generally leads to better outcomes than trying to time the market.

Rather than relying on seasonal patterns, most experts recommend focusing on the basics of sound investing:

• Diversification: Spreading your investments across different asset classes and sectors can help manage risk. Consider a mix of shares, property, fixed interest, and cash, depending on your goals and risk tolerance. Learn more about diversification.

• Clear goals: Set specific investment objectives, such as saving for retirement, a home deposit, or your children’s education. This can help guide your decisions and keep you focused during periods of market volatility. Find out more about setting investment goals.

• Staying informed: Keep up to date with changes in tax rules, superannuation contribution caps, and other policy developments that could affect your investments.

• Long-term perspective: Markets will always experience ups and downs. Maintaining a long-term view can help you stay calm during short-term fluctuations and avoid making decisions based on fear or speculation.

The past few years have provided clear examples of why sticking to a calendar-based strategy can be risky. During the COVID-19 recovery, for instance, the ASX rebounded strongly from May onwards, rewarding those who stayed invested. In other years, market volatility has been high, but investors who remained patient and avoided knee-jerk reactions often fared better than those who tried to time their exits and entries.

In 2025, factors such as Reserve Bank policy decisions and global sector trends continue to drive market movements throughout the year. This means that opportunities—and risks—can arise at any time, not just in the traditionally stronger or weaker months.

If you’re looking to build a resilient investment strategy this year, consider the following steps:

1. Review Your Portfolio Regularly

Check your investments at least once or twice a year to ensure they still align with your goals and risk tolerance. Rebalancing can help keep your portfolio on track, especially if certain assets have grown or shrunk in value.

2. Avoid Emotional Decisions

Market headlines and old sayings can tempt investors to make hasty moves. Try to base your decisions on your long-term plan rather than short-term trends or seasonal patterns.

3. Consider Professional Advice

If you’re unsure about your investment approach, consider speaking with a financial adviser. They can help you develop a strategy that suits your circumstances and objectives.

4. Stay Educated

The financial landscape is always evolving. Make it a habit to stay informed about changes in regulations, market developments, and investment products. This knowledge can help you make better decisions and avoid common pitfalls.

While 'Sell in May and Go Away' remains a popular saying, its relevance for Australian investors in 2025 is limited. The evidence suggests that market performance is shaped by a complex mix of factors, not just the calendar. By focusing on diversification, clear goals, and a long-term perspective, you can give yourself the best chance of achieving your financial objectives—no matter what month it is.