Historically, the month of May ain’t great. Over the last 60 years, half of Mays were “downers” as measured by the DOW. June and July tend not to be great, but that sets the market up for the end-of-summer rally, and better times in the Fall.
Two caveats:
First, during the bull market from 2017 through 2020 (after the pandemic crash of March 2020) the markets kept on rising. There was no Sell in May. 2021 was flat. So, this “rule” has not worked for the last five years.
Second, the past does not always repeat. We are currently in a rising interest rate environment. Rising interest rates inevitably lead to an economic slowdown, and then a recession, and stocks do not do well in a recession.
But wait, there’s more!
Interest rates have declined for the last decade. That’s great for the markets, in the month of May, or any month. Now that rates are heading high, that’s not good for the markets.
Since the bottom of the pandemic sell-off in March 2020, the SPX went up 100% (and has pulled back slightly since then). Why?
Because of money printing. I won’t bore you with the numbers; you can look them up, but suffice to say if you pump a few trillion dollars into the markets, the markets will go up.
But now, governments realized they have created a crap-ton of inflation, and that’s not good, so they are cutting back on what they are spending, so that’s less money for the markets, so down we go.
My point: sell in May is a thing this year, and I’ve already started. I sold more stocks this week, and I am now close to 50% cash in some of my portfolios.
Is that too cautious? Perhaps, but if so, so be it.
In a “risk off” environment Bitcoin is likely to continue to fall. I expect $30,000 Bitcoin in Q2, and $20,000 is not impossible.
So, I have cash, and will deploy it when the time is right.
For now, I hide.
That’s the plan. More next week.
Sell in May And Go Away, Again?
by JDH on April 30, 2022
Historically, the month of May ain’t great. Over the last 60 years, half of Mays were “downers” as measured by the DOW. June and July tend not to be great, but that sets the market up for the end-of-summer rally, and better times in the Fall.
Two caveats:
First, during the bull market from 2017 through 2020 (after the pandemic crash of March 2020) the markets kept on rising. There was no Sell in May. 2021 was flat. So, this “rule” has not worked for the last five years.
Second, the past does not always repeat. We are currently in a rising interest rate environment. Rising interest rates inevitably lead to an economic slowdown, and then a recession, and stocks do not do well in a recession.
But wait, there’s more!
Interest rates have declined for the last decade. That’s great for the markets, in the month of May, or any month. Now that rates are heading high, that’s not good for the markets.
Since the bottom of the pandemic sell-off in March 2020, the SPX went up 100% (and has pulled back slightly since then). Why?
Because of money printing. I won’t bore you with the numbers; you can look them up, but suffice to say if you pump a few trillion dollars into the markets, the markets will go up.
But now, governments realized they have created a crap-ton of inflation, and that’s not good, so they are cutting back on what they are spending, so that’s less money for the markets, so down we go.
My point: sell in May is a thing this year, and I’ve already started. I sold more stocks this week, and I am now close to 50% cash in some of my portfolios.
Is that too cautious? Perhaps, but if so, so be it.
In a “risk off” environment Bitcoin is likely to continue to fall. I expect $30,000 Bitcoin in Q2, and $20,000 is not impossible.
So, I have cash, and will deploy it when the time is right.
For now, I hide.
That’s the plan. More next week.