Most of us have heard the old market adage “Sell in May and go away”. And it is backed by the market’s seasonal performance pattern over the last six decades.
Historically—the market has delivered better performance during November to April and then underperformed during May to October months. This pattern can be partly explained by higher investment flows during winter months and lower trading volumes during summer (resulting in higher volatility). And then it becomes self-fulfilling to some extent.
This strategy has worked well during the past three years. Is this year going to be different? Aggressive easing moves by the central banks have made most other assets unattractive; so will investors continue to pour money into stocks during summer?
Please share your trading strategy for the summer months:
1) Sell in May and stay in cash through November
2) Take profits on some of the winners and reduce net long position
3) Increase exposure to low-volatility/defensive stocks
4) Continue to buy stocks—they will go higher
5) Other-please explain
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