Investing this summer: What you need to know

August 2, 2016, 8:35 am

The phrase “Sell in May and Go Away” is a popular adage which encourages investors to sell their stocks in May to avoid season decline and then reinvest come November.  Historically, the U.S. stock markets performance from May to October reflects the summer vacation season’s slow pace. Activity is higher November through April, when investors generally see higher returns.

Anthony Paul

Anthony Paul

But before you make any decisions, it should be noted that the S&P has had negative returns between May and October only 38 percent of the time since 1950. This means that “sell in May and go away” may not always produce higher returns.

From the Brexit and other woes, the markets have certainly experienced its fair share of volatility this summer. While investors are more cautious, it also presents potential opportunities. Especially as the markets seem to have rebounded from the lows.

For those exploring opportunities this summer, global stocks and bonds generated modestly positive returns despite increased market turbulence last quarter. While equity and currency markets were expected to bear the brunt of the surprise outcome of the Brexit vote, both have taken the decision in stride thus far – trading above the levels reached in the week leading up to the vote.

Investors who have a long-term horizon should take a look at the opportunities that are available overseas. If your investment outlook is more short-term, stick to your financial goals and maintain your position through the summer.

The bottom line is that markets can be unpredictable and you can’t rely solely on history to predict the market’s performance in the future. Of course, be cautious when considering investments but don’t let one phrase completely hinder you from making investments this summer. Do your research, consult your financial advisor and make an informed decision.

Remember that diversification is critical, particularly so this summer with the ongoing volatility. Review your financial needs and asset allocation plan with your financial advisor during this period of modest economic expansion to make sure your investments are suitably aligned with the market.




The following two tabs change content below.

Anthony Paul

You must be logged in to post a comment Login