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“Sell in May and Go Away” A Good Idea? Prolly Not. And: Free Download

May 5, 2014

Go to “Core Portfolio” for current holdings. 

Arlington Capital is a financial advisor in the Chicago area that provides very useful information in their website and in their radio show.  You should be aware of the trends discussed in this article that they published this week.  Although I am not a client, I have followed their writings for at least ten years and they are very good.


“”We’ve all heard the popular Wall Street adage, “Sell in May and go away.”  There is a strong case of avoiding exposure to the market from May through October.  Almost all of the money made in the market over the last 50 to 60 years is made between November 1 and April 30.  In fact, losses have occurred between May 1 and October 31.

In addition, this is a mid-term election year.  Every single midterm election year for the last 50+ years has seen a correction in the middle part of the year starting in the second quarter and ending sometime in the in the third or fourth quarter.  The smallest correction has been an 8% decline and the biggest corrections have been during the bear market years that were over 30% declines.

Now this is not a bear market so we don’t expect something like that to occur but even in 2010, the last midterm election year, there was a 16% drop, in 1998 there was a 19% drop, in 1994 there was a 9% drop.  So it’s not a reach to say that we could see a correction of 8%, 15% or even 20% during this midterm election year.  The current 40% cash position in the PAAS Model can help cushion portfolios from such a correction.””

So, what to do?  Unless I see an imminent market collapse, I do not plan on selling anything.  If we see a decline, most likely the markets will rebound higher going into late 2014.  As a dividend investor you are probably better off keeping good positions and collecting the yield.  Day traders and swing traders of course follow completely different strategies such as going short or even holding cash.  But that’s not us.

The Sunday New York Times was giving rave reviews for a free download:  If You Can:  How Millennials Can Get Rich Slowly.  The link is:  http://efficientfrontier.com/ef/0adhoc/2books.htm





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