Sell in May: Fact or Fiction?

It’s May and once again articles are coming out about ”Sell in May and Go Away.”  Some of them cite the underperformance of the market during summers since the 1950s, others argue that this is mere superstition and anyone who “went away” last year would have missed out on 7% gains. 

As MarketSmiths, we don’t predict, and we don’t listen to others. We listen only to the market: the indexes, leading growth stocks, and the performance of our portfolio. If we see signs that the market might be topping and going into correction, we adjust our activity, but we always maintain our research and stay engaged.

For example, during corrections we look for stocks with high Relative Strength ratings that are fighting against the downtrend. Mr. O’Neil, our founder, offers this example in his book How to Make Money in Stocks, : The Dow was down more than 12 points, and the stock Control Data was trading at $62, up 3 ½ points on high volume. “I bought the stock at once. I knew Control Data well, and this was highly abnormal strength in the face of a weak market. The stock later ran up to $150.”

Recognizing strength in a weak market is an opportunity many investors miss because they want to believe it’s better to “sell in May.” At MarketSmith we believe it’s far better to become an expert investor, experienced in all market conditions.  

If you have any questions, you can always reach us at (800) 424-9033 or at reachus@marketsmith.com.

 

Best returns,

The MarketSmith Team