Sell in May strategy off to lousy start

Most years, investing in stocks in May is akin to going on a beach vacation to Maine in February.

Investors’ money often gets an icy reception in May, with the Dow finishing higher only 50% of the time in the past

20 years. May also marks the start of the worst six-month stretch for equity performance, a stat that helped coin the expression, “Sell in May and go away.”

But investors that took that advice are probably regretting that decision. The Dow Jones industrial average and other major U.S. stock indexes all rose.

The big winner was the Russell 2000, which gained 6%. This index, which is filled with small stocks that get most of their sales from domestic sources, was able to sidestep the headwinds from overseas, such as trade disputes, a political crisis in Italy which is raising questions about the future of the eurozone, and U.S. and North Korea tensions.

Small stocks are also less negatively impacted by the rising dollar, which boosts prices of U.S. exports and crimps sales of companies that sell things overseas.

The tech-dominated Nasdaq gained

5.3%. The sector was powered by exceptionally strong first-quarter profit results that saw 93% of tech companies top analyst forecasts. The Dow gained

1%, and the S&P 500 rose 2.2%. Whether the gains can continue is another question. Since 1945, investing only in the May thru October period would have turned a $100 investment into $220, small change compared to that same $100 growing to more than

$8,100 in the November thru April period, Bespoke Investment Group says.