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Selling in May maybe

By Dian Vujovich

Okay, one week into the month of May and most investors probably didn’t follow that old Wall Street adage “Sell in May and go away” last week and perhaps wished they had. So I’m guessing most in the game are now scratching their heads and humming Marvin Gaye’s 1971Motown hit, “What’s Going On”.

I’m not sure how many Wall Street adages there are, or, how many investors actually know what they are and then follow their advice. I don’t think, although I can’t prove it, professional money managers haven’t sold all of the millions of shares of stocks they manage and gone home. If they had, what would we watch on CNBC? Jim Cramer without an opinion? Never happen.

I am sure that there always is a nugget of truth in investment adages. The trouble is, people are goofy about investing preferring to sell their winning holdings and hang on to the losers. They also have very short memories. And, a history of investing as bull markets continue to climb to new heights and not when bargain prices abound during bear market periods.

So, today all three indices, the DJIA, NASDAQ and S&P 500 closed lower than they had on April 30. Today, May 7, the DJIA closed at 17,924.06 and on April 30th at 18,035.53; the NASDAQ closed today at 4,945.54 vs 5,023.64; and the S&P 500 ended at 2,088 vs. a close of 2,106.85 on April 30, 2015. That’s a one tiny step in the see-it’s-true column for all the believers of the sell in May investment strategy.

Past market performance, which is how the strategy came to be in the first place, does bears witness to a seasonality of equity prices. But it doesn’t come with a guarantee. Consequently, there is no promise that stock prices are going to fall or remain flat during the May through September time frame.

That said, Janet Yellen’s recent comments about market valuations being high are worth noting and may be cause for some overall market cautionary concerns going forward. But she— like every other economist, portfolio manager, investment professional or down-home investor that I know of— doesn’t own a crystal ball foretelling the comings and goings of future prices in the marketplace.

If there were one, I’d have it.

Instead, no matter what time of year it is, all we are ever left with is ourselves and the meeting our own individual investment goals the best way we possibly know how.


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