“Sell in May and Go Away”
This is only one of the hundreds of clever, and sometimes accurate, snippets of wisdom that populate the investment spectrum. Also, currently timely would be “June Swoon” and “Summer Rally”. In fairness, there is generally some historical basis for most of this type of “wisdom”. For example, on average, since 1950, substantially all of the markets’ gains, as measured by the broad indices, have occurred during the six months from November 1 to April 30, while the May 1 to October 31 period has been lackluster at best. Hence, sell in May. Of course, results in some years have varied significantly from the 60-year average. So far this year, January-April was very strong, May was better than average and June is off to a rocky start. “Summer Rally” anyone?
One-liners and fun market indicators such as the Super Bowl, sun spot and hemline indicators, provide excellent fodder for water cooler conversations, but in the real world investment research and portfolio management are hard work. A serious approach to successful investment strategies requires an in-depth consideration of a wide range of political, economic and corporate information, with a view to identifying relatively attractive opportunities. This can then form the basis for developing a strategy that meets the requirements of individual clients.
Investing: It’s not a tweet, it’s a lifetime.
All comments or suggestions are welcome.
Walter J. Kirchberger, CFA