Should You Sell in May Before You Go Away on Vacation

Should You Sell in May Before You Go Away on Vacation
Stocks are almost back as high as they were on February 19, 2025. The S&P500 was down -8.8% as of May 6, 2025.
 
So, should you sell in May before you go away on holiday? And by that I mean, rebalance and make sure that you have an age-appropriate, properly diversified plan that is overweighted a little safe (in case of more weakness). Additionally, if you’re suffering from paper losses, is there a better strategy?  
 
Below the topics we will cover in this blog.
 
Spring Rally
September Back to School Stock Sales
Expensive Stock Prices
Tariffs
Chance of a Recession
Whales and Hedge Funds
Paper Losses
 
And here is more information on each one.
 
Spring Rally
While we did have a little recovery from the rout earlier in April when the market flirted with the Bear (-19% on April 8, 2025), the Spring Rally really didn’t measure up this year. Typically, March and April are two of the most reliable performing months of the year. However, with stocks still trading near their all-time high, now is a great time to rebalance our wealth plan.
 
September Back to School Stock Sales
When we rebalance our wealth plan at the end of April/early May we are often capturing gains at the high. This also gives us more liquidity. If the summer is weak, and September is true to form (the worst performing month of the year historically), then we are in a position to buy more at a lower price at the end of September.
 
Rebalancing 1-3 times a year is a very good idea. This is not day trading. It’s simply ensuring that we are observing Modern Portfolio Theory, which is a time-proven, 21st-century plan. Our pie charts make MPT as easy as a pie chart.
 
Every seasoned broker-salesman knows the term: Modern Portfolio Theory. However, I do a lot of unbiased 2nd opinions, and I have yet to find one that was truly age-appropriate and properly diversified. Even more alarmingly, in today’s world I’m seeing a great deal of paper losses in conservative portfolios, and for people who are close to retirement. Keeping our money safe, and having it intact and available is always important, but even more so as we get closer to a time when we are no longer receiving earned income.
 
Expensive Stock Prices
One of the reasons why it’s a very good idea to do our rebalancing now is that stocks are historically expensive. Most of us have heard the term “buy low, sell high.” (In our nest egg, it’s a better idea to think of it as adding low and trimming high, so that we keep the proper amount safe and diversified.) Elevated equity prices are highly correlated with swift and startling declines. In the words used in the Financial Stability Report that was released on April 25, 2025, “Elevated valuation pressures may increase the possibility of outsized drops in asset prices… equity prices remained high.”
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Tariffs
Tariffs are still a moving target. However, in general, they tend to increase inflation and slow down economies. The U.S. economy contracted -0.3% in the 1st quarter and is expected to slow down to 1.7% GDP growth in 2025, from 2.8% in 2024.
 
The trade war will be hard on a lot of different industries and companies but does have a few positive spots. We have seen the Chinese companies Temu and Shein suspend deliveries in the United States, which is helpful for the beleaguered U.S. fashion and retail industries and may help to reduce fast fashion waste. (As the co-creator of the Earth Gratitude project and the author of The Power of 8 Billion: It’s Up to Us, I’m hopeful that this pause will allow the word to get out about the many harmful side effects of polyester, which is an oil product. Up to 80% or more of the clothes churned out by fast fashion companies can be composed of oil-based fabrics.)
 
The automotive industry is one that could be adversely affected. In their 1Q 2025 financial results, Ford suspended their forward guidance and warned that they could have a “tariff-related net adverse adjusted EBIT impact of about $1.5 billion for full year 2025.” Since Ford Motor Company has teetered between BBB- (investment grade) and junk status over the past decade, tariffs could have a negative impact on Ford’s credit rating. Tesla is in a slightly better position for a variety of reasons, including: 1) having the top selling sedan in the world, 2) being one of the top selling EV brands in the world, and, 3) manufacturing cars in the region that it sells. However, Tesla (and Ford and GM) are being challenged by lower-priced Chinese EV manufacturers, which is why on both sales and profits. You can learn more about this in my Tesla blog.
 
Chance of a Recession?
JP Morgan has put the risk of a recession in the US in 2025 at 60%. Of course, that also means there is a 40% chance that we skate by without one. This is another argument for making sure that we know exactly what we own and why now and understand how to protect our wealth from another downturn in stock prices.
 
It’s important to remember that 21st-century recessions have historically cost a lot of investors more than half of their wealth and then take years to crawl back to even. It took the NASDAQ Composite Index 15 years to return to its March 2000 high after the Dot Com Recession, which handed -78% losses to Dot Com investors. (A million dollars became $220,000.) During the Great Recession, 20 million homes were foreclosed on and the Dow Jones Industrial Average Index dropped by -55%, taking almost six years to recover.
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Stock Data by MSN.com. (c) Microsoft. Used with permission.

Stock Data by MSN.com. (c) Microsoft. Used with permission.

Whales and Hedge Funds
On April 8, 2025, when stocks plunged by -19% from their Feb. 19, 2025, highs, the selling was coming from the whales of Wall Street. That is the way it typically goes. The big players on Wall Street take profits at the top. Main Street is placated with consoling words that it is really not as bad as everyone thinks. By the time when we think it’s an Apocalypse, we’re closer to the bottom, which is when many Main Street investors are tempted to sell. In fact, if you look more closely at the charts above, recessions are not typically declared until Main Street has lost 40% or more of their wealth. In most cases, they won’t be officially declared until at least seven months in. This is another reason why we want to rebalance regularly rather than sit on our hands.
 
In my most recent Money Show presentation, one of the participants asked me if Main Street investors would just get used to the volatility. The problem with that premise is that losing money isn’t a mental exercise. It can plunge us into a real-world crisis. Most of us really can’t afford to lose any of our wealth much less half of it. Our FICO score plunges. Our ability to solve basic financial problems, such as paying our mortgage or rent, becomes problematic. And when fear rules the day, we’re tempted to sell low to stop more losses and sleep at night.
 
Proper diversification with regularly balancing is a “capture gains” mindset. The reason most people cannot buy low and sell high is this it’s contrary to human nature, until we train our emotions to be in service to a better plan. Additionally, most people don’t buy low because they can’t. When you lose half or more in a recession, you’re struggling to stay afloat and to keep your home. You just have the resources to take advantage of the opportunities that arise when prices drop.
 
Paper Losses
In a normal recession, bonds can be buoyant. It is one of the ways that Milo Bolden earned gains in the Great Recession, when most people around her lost half or more of their wealth and took years (or a decade) to get out of the hole.
 

However, these days there is too much leverage, debt, low credit quality and duration risk for a cut in interest rates to solve everything. In 2022, long-term government bond values dropped -26%, resulting in the failure of five banks in early 2023. If you are suffering from paper losses, your conservative plan could be a lot riskier than you realize. Learn more in the blogs below.
 
Should I Have a Managed Portfolio
Paper Losses


 
Bottom Line 
It’s human nature to wait until things are broken to fix them. However, it’s a far better plan to fix the roof while the sun is shining than to wait for the storm to cause a flood.
 
“Sell in May before you go away” is a popular Wall Street aphorism for a reason. Wall Street goes dark in August, as burned-out financial executives flee Manhattan and the Beltway. Bad news is often buried over the summer. That is one of the reasons why September tends to be the worst performing month. The investor who has captured gains, locked in their profits and increased liquidity is in a position to buy low if prices weaken over the summer and in September.
 
In 2025, sell in May before you go away on vacation is likely to be a good idea. I’m not suggesting promoting market timing. Rather, make sure that we are:
 
·      Keeping a percentage equal to our age safe,
·      Diversifying the at-risk portion of our nest egg,
·      Overweighting an additional 10-20% safe, due to heightened leverage, expensive prices, lower liquidity and the increased risk of a recession.
 
I’m hosting a Financial Freedom Retreat online June 6-8, 2025, where you can learn and implement this strategy. Email [email protected] to learn more now.
 
 
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Natalie Pace at the Ritz Carlton in Powerscourt, Ireland. Photo by Marie Commiskey.

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.