by Michael Tarsala
A lot of folks are now saying that the old market adage “Sell in May” is not the way to go this year.
Columnist David Berman says you do so “at your peril”. And the analysts at S&P also think it’s a bad idea.
That doesn’t necessarily mean that they are super bullish: It just means that they think it’s better than not being invested, or chasing bonds.
Here are three thoughts you might not have heard before on “Sell in May”.
1) The next major move for the markets might not be up or down, but choppy sideways action. The forex markets, which tend to lead equities, also are suggesting that may be the case. If it does play out that way, an active and agile equity manager may be able to take advantage of the underpricing and overpricings in that type of market, and possibly the predictable highs and lows of price patterns.
2) Stocks may continue to be more attractive relative to bonds. Noted technical analyst JC Parets made the argument recently that until proven otherwise, stocks continue to get the benefit of the doubt as the superior asset class.
3) Sell in May has worked in the past, but not the recent past. With the exception of last year, research suggests that selling in May has not worked well over the past decade or so. Also, the strategy may be too simplistic; caution and tempered enthusiasm with stock investing is probably more appropriate.
Taken as a whole, there does not seem to be a near-term reason to panic.
