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For the past six weeks, investors have been riding a nice summer melt-up on the stock market. The upshot of this remarkable, and remarkably quiet, run is that it goes against the old “Sell in May and go Away” adage that has worked well in the past. We went against this trend in our April commentary with this comment;
While the ‘Sell in May’ mantra has worked for most of the past 50 years, we are not going with it this year. We continue to believe that we are in a period where stocks are the most attractive asset class and where we see the potential for substantial gains within the market. “Sell in May and go away” was good advice the last two summers. Not so this year.
Of course, after the Dow fell 6.2% in May, 2012 was looking a lot like a repeat of 2010 and 2011. But since then, it’s been mostly smooth sailing, with the Dow hovering the past few days around its high-water mark for the year. To be sure, there’s still plenty of time left for the ugly side of “sell in May” to rear its head. According to the old adage, investors should stay out of the waters until Halloween — a full two months away and through historically two of the most harrowing months of the year for investors.
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