Tax Advice Santa Rosa – HAS “SELL IN MAY” GONE AWAY?

May 20th, 2013 → 8:15 pm @ // No Comments

Investors aren’t yet backing out of stocks this spring.

Healthy skepticism hasn’t motivated much selling. An old belief has lingered on Wall Street for years – the belief that investors should get out of stocks in May and get back into stocks in October. But here we are in May – and while analysts are wondering how much more upward progress stocks can make, gains are still occurring. On May 9, the S&P 500 closed at  1,626.67 – up 1.82% so far for the month after going +1.81% for April. 

A May retreat is hardly a given. You can readily find articles questioning the current rally, insisting a pullback is ahead. After all, didn’t stocks swoon in spring 2010 and spring 2011? Wasn’t last spring just an aberration?

The selloffs of spring 2010 and spring 2011 weren’t really prompted by seasonal behavior. You had the EU debt crisis, the twin calamities hitting Japan, and the debt ceiling fight (and the resulting U.S. credit rating downgrade) occurring. By contrast, across May-September 2012 the S&P 500 rose more than 4%.    

Going back decades, the case for selling in May appears just as inconclusive. During 1965-1984, the S&P lost ground …Read More

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