New proverb
There is a famous adage on Wall Street called “Sell in May and go away.” The investment approach posits that stocks tend to underperform in the six months through October, so investors should convert to cash at the start of May and then buy into a dip later in the fall. The origins of the saying go back quite a while, with reasons ranging from vacation cycles to bonuses, and others noting that the worst market crashes of 1929 and Black Monday in 1987 occurred during this period.
Not this year: Stocks are continuing to recover from a tariff-induced selloff, posting outsized gains since the end of April and the first half of May. The S&P 500 (SP500) is even up a whopping 6% over the past two weeks, and a surprise trade truce and soft inflation data have only added to the market magic. The S&P on Tuesday even closed with YTD gains for the first time since February, following bouts of volatility in the current news-driven cycle. Here are the best and worst performers
What about other years? Many academic papers and market research have been written on “Sell in May,” with breakdowns by stock class or periods of time. While seasonal patterns do exist, and equities could face some increased risk in the summer months, they still tend to go up over the long term despite additional volatility. Staying fully invested could prove safer than trying to time the market in any given year, and there are countless indicators out there for better portfolio decisions, such as earnings, valuations, the macro landscape and the direction of interest rates. Look at the S&P 500’s wild ride since ‘Liberation Day’
SA commentary: “Hold your investments and hedge instead of selling in May; the market’s resilience suggests potential gains, despite tariff concerns and recession fears,” Investing Group Leader David Lerner wrote at the beginning of the month. “Panic selling created buying opportunities in tech and communication big-caps; disciplined buying at support levels yielded over 20% returns.”
#Buy #Feast