Which Stock Sectors Do Best From May Through November?

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A popular stock market refrain says "sell in May and go away." During summer, the stock market sometimes experiences doldrums, with stock prices drifting aimlessly and sometimes declining. Each year is different, so there are no guarantees that the market will repeat this pattern, but there are several sectors that have historically performed better between May and November.

Entertainment

  • During the summer, many people go to the movie theater more often, leading to increased profits in the entertainment sector. Disney is a well-diversified company that usually benefits from both summer moviegoers and other summertime recreation. According to CNN Money, other entertainment stocks that have done well during summer include Pixar and Lion's Gate.

Technology

  • Large technology companies have also performed well during the summer. If you look at the stock charts for big-name technology companies such as Broadcom and Cognizant, both companies experienced significant gains each summer between 2006 and 2010. It pays to do your research on price history first, however, as some technology companies, such as Microsoft, lost money in summer months during this same period.

Biotechnology and Utilities

  • According to CNN Money, biotechnology companies do particularly well starting in August and stretching through to the winter months. This is because stocks in this sector tend to rise before biotechnology conferences, which are primarily held during this season. In addition, during hot summer months, people use more power, so utility stocks can see gains as people spend more money on electricity.

An Aggressive Approach

  • If you believe stock prices are likely to fall during the summer and early autumn, you may wish to take a more aggressive approach to profit from declining prices. There are many inverse exchange-traded funds (ETFs) available that are designed to rise as market indexes, such as the S&P 500, decline. For example, SDS is an ETF that rises when the S&P 500 declines, while QID trades inverse to the Nasdaq 100 index.

References

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