Sell in May and Go Away?
No Refunds!
Over the next month, we will be hearing the “sell in May and go away” cliche many times on CNBC, FBN and Bloomberg. Historically, this has been a successful strategy in that the “best” 6 months for stocks are usually November-April while the May-October months are notoriously lousy. There is no particular reason why market performance has behaved that way over time. It is just “common wisdom” for those following the markets.
I have always hated “common wisdom” without facts or reason to support a notion, aren’t we really in “old wives tale” territory? Anyone who has worked on Wall Street has heard the story that Joseph P. Kennedy decided to get out of the market before the 1929 crash because a shoe-shine boy was giving him stock tips! If that doesn’t tell you enough about “common wisdom” and to do your own homework, I suggest you keep your money in the mattress.
It is in this spirit that I wanted to share an article I read earlier that argues the sell-in-May strategy just might not work this year. Seeking Alpha’s Frank Holmes cites a number of factors that show this year should buck the typical bearish trend for this time of year. Among other reasons, the ones that caught my eye are - earnings are up this year, companies are buying back their stock and the number of companies paying dividends is at its highest since 2000! Now, I don’t claim to be an expert investor and am not asking you to take my word to buck the trend, but I do urge you to read the article and judge for yourself. Also, why not give your take on this cliche in the comments section below?
Be good,
Don Montanaro
TradeKing Bigdog, Chairman and CEO
www.tradeking.com
Follow Don on Twitter, hone your skills at TradeKing All-Stars. You can also follow us on Twitter, Facebook or YouTube.
[Image taken from flattop341 via Flickr]
Online trading has inherent risk due to system response and access times that may vary due to market conditions, system performance, and other factors. An investor should understand these and additional risks before trading.
(c) 2012 TradeKing Group, Inc. Securities through TradeKing, LLC. All rights reserved. Member FINRA and SIPC.
I have always hated “common wisdom” without facts or reason to support a notion, aren’t we really in “old wives tale” territory? Anyone who has worked on Wall Street has heard the story that Joseph P. Kennedy decided to get out of the market before the 1929 crash because a shoe-shine boy was giving him stock tips! If that doesn’t tell you enough about “common wisdom” and to do your own homework, I suggest you keep your money in the mattress.
It is in this spirit that I wanted to share an article I read earlier that argues the sell-in-May strategy just might not work this year. Seeking Alpha’s Frank Holmes cites a number of factors that show this year should buck the typical bearish trend for this time of year. Among other reasons, the ones that caught my eye are - earnings are up this year, companies are buying back their stock and the number of companies paying dividends is at its highest since 2000! Now, I don’t claim to be an expert investor and am not asking you to take my word to buck the trend, but I do urge you to read the article and judge for yourself. Also, why not give your take on this cliche in the comments section below?
Be good,
Don Montanaro
TradeKing Bigdog, Chairman and CEO
www.tradeking.com
Follow Don on Twitter, hone your skills at TradeKing All-Stars. You can also follow us on Twitter, Facebook or YouTube.
[Image taken from flattop341 via Flickr]
Online trading has inherent risk due to system response and access times that may vary due to market conditions, system performance, and other factors. An investor should understand these and additional risks before trading.
(c) 2012 TradeKing Group, Inc. Securities through TradeKing, LLC. All rights reserved. Member FINRA and SIPC.
Comments
Follow commentssnowman posted May 01, 2012 (07:44PM)
Midneo posted May 01, 2012 (09:22PM)
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