The Most Important Question in May: Should You Sell and Go Away?

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Published by Taylor Financial Group

This month historically kicks off a six-month span of slow stock market performance.  Most investors fall into the trap of obsessing over the infamous question – “Should I sell in May and go away?”  We get it.  A sluggish market can cause some investor anxiety.  But we want to encourage you to stay the course (as we always do).  Don’t be distracted or let the “sell in May” theory play on your psyche.  Remember that historical data also shows that investors who don’t sell during this time period are more likely to see some gains in their portfolio at the end of it all.

Don’t Sell in May – Just Stay!

There is reason to “stay in May!”  Of the past six years, five of them have shown gains in the S&P 500 Index during the “sell in May” period, with May being the highest performing in the past five years, according to LPL Financial Research.  We’re not taking away the truth behind this expected weak market period.  But we also can’t ignore the other (more positive) factors, like an impressive earnings season and modest valuations, which could provide some opportunities for investors.  Not to mention that, truthfully, there are plenty of other factors that should be considered when figuring how to invest your money (such as taxes and trading costs), no matter the time of year.

Other Investment Considerations

We all know that different elements can affect the behavior of the stock market.  So, we shouldn’t automatically place the blame on the “sell in May” notion and make the mistake of ignoring some of these other relevant influences.  For instance, rising interest rates, potential rising inflation, and a flattening yield curve, all of which are closely connected, are considerations, though not yet serious ones, as the Fed has not had to take any action thus far.  We’ve also recently had some pretty serious data privacy issues, which could hurt the value of other consumer-driven web companies.  On the bright side, North Korea’s potential decision to de-nuclearize could have a very positive impact on the world and the stock market.

No matter what the elements are, we are always closely watching the markets so that we can keep you informed and help you make smart investment decisions.  We continue to advise clients to stay the course and consult us before making any investment decisions.  If you’re concerned or have questions about market performance or your portfolio strategies, give us a call today!  After all, we’re here to give you financial confidence.

 

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