The classic adage “Sell in May and go away” is facing a massive reality check. While history suggests a summer slump, recent data and current market momentum suggest that sitting on the sidelines this year could be a very expensive mistake.
The Reality Check: Tradition vs. Modern Gains Historically (since 1945), the S&P 500 averages a lackluster 2% gain from May to October. However, in the last decade, that average has jumped to 7%, including a staggering 22.1% surge last year. If you had invested $10,000 continuously since 2016, your money would have grown to $34,000—nearly double the return of someone who went to cash every summer.
Why the “Bulls” are staying in:
The V-Shaped Recovery: The S&P 500 just erased a nearly 10% decline in only 11 sessions following oil supply shocks. History shows that after recovering such losses, markets often climb an average of 8% in the following three months.
Economic Resilience: Strong corporate earnings and a resilient U.S. economy are successfully absorbing the “energy shock” from the U.S.-Iran conflict.
Momentum over Seasonality: As strategists note, the current trend is often more powerful than the calendar.
The Risks to Watch:
The Midterm Factor: 2026 is a midterm election year. Historically, these years can be volatile, with the S&P 500 declining in 5 of the last 10 midterm cycles.
Fed Transition: The expected hand-off from Jerome Powell to Kevin Warsh introduces a new layer of policy uncertainty and a potentially “bumpier” path for interest rates.
The Bottom Line: While there is a “wall of worry”—from geopolitics to political cycles—blindly following seasonality has been a losing strategy for ten years straight. In 2026, market momentum and earnings power are proving to be much stronger than old Wall Street clichés.
