5 Tips For Your Portfolio To Survive The Summer Doldrums
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Is Your Portfolio Ready For Summer?

We’ve all heard the old adage, “sell in May and go away” until November. And as we enter the summer months with more time on our hands to get our financial affairs in order, we’re asking ourselves: does this investing advice hold true in bringing better financial returns?

“Sell in May and go away” is an age-old investing strategy warning investors to begin selling stock holdings in the month of May, to hedge against the risk of seasonal market declines throughout the “summer slump”. The goal is to stay out of the market during the more volatile months between May and October, and re-invest around November. According to some, investors who follow this strategy will earn higher returns than those who do not.

Curious to find out how many people actually follow the advice to sell in May and go away until November, we first dug through our user data for some hard numbers. For starters, check out the chart below. We reviewed the average stock holding sales transaction amounts month over month, from Q1 of 2013 to the end of 2014, and low and behold sales spiked in May of both years.

Sell Amount
Personal Capital*

Clever sayings aside, what does jumping on cookie cutter investing advice like “sell in May and go away” mean for your financial potential? The risk of selling in May specifically is that while markets may arguably be unpredictable during summer months, you could be missing out on longer-term returns year over year by selling in May.

Historically, it has been proven that the “sell in May” strategy has not performed better than simply buying and holding investments long-term, as seen here:


While it can be tempting to follow “trusted” or seasonal advice to revamp your portfolio, you might want to take our advice instead. Before you head off on your summer vacations this year, set time aside to build a holistic investment strategy that can take longer-term factors into account.

Ready to get started? Make sure to incorporate these 5 things in your investing plan:

1. Diversify

We all know the market has gone through ups and downs, both in summer and every other season. To protect your investments as best as possible while you’re hitting the beach this month, diversify your portfolio composition first by asset class. Within stocks, further diversify by sector, size, and style. Also, make sure you have a significant number of different stocks, not just a few big companies making up the majority of your portfolio.

2. Personalize

What are your financial goals? If you’re planning that once in a lifetime summer vacation, or budgeting for the purchase of your dream summer home, your portfolio strategy should reflect that. Be honest about your risk tolerance, time horizon, and liquidity needs. If, for example, you need liquid assets to remodel your house in 6 months – make sure you’re realistic about how much money you tie up today.

3. Rebalance

Rebalancing your portfolio is also a key piece of a successful investing strategy, used to keep long-term goals on track, avoid emotional mistakes, and minimize risk. It can be helpful make a plan to rebalance your portfolio when any given asset class deviates more than a certain, pre-determined percentage.

4. Tax optimize

A solid tax optimization strategy could mean 1% higher annual returns for your portfolio, a substantial addition if you’ve set your sights on a couple of luxurious summer getaways. A few good options to optimize taxes are to avoid mutual funds, implement tax loss harvesting, and choose tax efficient investment vehicles.

5. Monitor

When you’re firing up the grill with family and friends this summer, it’s easy to put your financial plans on the back burner. But don’t forget to monitor your spending and investments, easily done from any vacation destination with the help of a mobile personal finance app. With financial tools like Personal Capital’s Investment Checkup, you can see how your investments are performing today, and get expert recommendations for how they could do even better in the future.

This summer, take a step back and think twice before you follow on the heels of seasonal investing advice. Get your investing strategy in order with our 5 simple steps here, and take a few of our other posts below along for some beach reading!

Take The Emotion Out Of Investing For Better Returns
Overworked? Here’s How To Achieve More Balance In Your Life
Is Early Retirement More Attainable Than We Think?
How Multitasking Can Work Against You When It Comes To Your Finances
Should I Buy A Vacation Property?

*Data based on information available from Personal Capital software users.
**Data available from Forbes.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Marianne is Communications and Content Manager at Personal Capital.
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Let us know…

This year, my top financial priority is:

Building my emergency fund
Paying off high-interest debt
Budgeting better
Saving for a short-term goal, like a vacation or new car
Increasing my investment contributions
Maintaining status quo - I’ve got this under control

Make moves toward your money goals with Personal Capital’s free financial tools.