Global Week is here: Is “Selling in May” just a superstition?

Conventional wisdom can be a stubborn force.

With May trading in full swing this week, should investors continue to follow the old adage of “sell in May and walk away” – a strategy of selling stocks in May and re-entering the market in November to avoid the low returns and volume of the Northern Hemisphere summer?

Currently, commonly accepted beliefs and traditional trading ideas are being tested.

If investors exit stocks now, they may risk losing profits even after April passes. european Stocks 600 and german dachshund Having just completed its best month since January last year, Italy FTSE MIB performed even better, with a nearly 9% gain making it the strongest month since January 2023.

On the American side, S&P500 and Nasdaq This was the best monthly performance in about six years.

Much of that is due to the Trump administration changing the game for investors. While a possible resolution to the Iran war could send stocks higher this spring, major stock markets around the world have remained surprisingly resilient through the turmoil in the Middle East.

In recent years, investors who sold out in May have missed out on the rally, with JPMorgan’s trading desk noting that over the past 10 years, the average return for the S&P 500 was 1.5% in May and 1.9% in June. July returns were even better, averaging 3.4%.

In Europe, Deutsche Bank crunched the numbers to see how its “sell in May” strategy would play out on this side of the Atlantic. Regarding the Stoxx 600, Deutsche Bank says, “In 25 out of 39 years, a ‘sell in May’ strategy has underperformed a simple buy-and-hold strategy, offering no statistical advantage.”

Investors may want to be more nimble in May, as there will be a ton of gains from European companies in the coming weeks. Major bank names such as Unicredit, HSBC and Commerzbank All companies are expected to publish figures in the coming days, but the energy giants shell and pharmaceutical group novo nordisk will also dominate the headlines.

Despite the record rise in global stocks, there are alarm bells.

Central banks on both sides of the Atlantic remain cautious, with Federal Reserve Chair Jerome Powell saying “inflation remains high,” ECB President Christine Lagarde warning that they are monitoring “the impact of negative supply shocks” and the Bank of England painting an alarming worst-case scenario for inflation.

With all these market factors at play, investors must decide between traditional trading or a more non-traditional strategy, but as Deutsche Bank says, a “sell in May” strategy offers no more certainty than a coin toss.

Monday: UK market holiday, April PMI data across Europe

Tuesday: Earnings from Unicredit, HSBC, AB Inbev, Ferrari, AMD

Wednesday: Novo Nordisk, Infineon, BMW, Diageo, Disney earnings.

Thursday: Earnings from Shell, Rheinmetall, Maersk, BMPS, AirBnB

Friday: Earnings from Commerzbank, IAG