Whether or not the old adage of “Sell in May and go away” means anything for traders over the decades is one thing. What it may portend for business owners and others looking over the past decade might be quite another.
It’s hard to turn on any business/financial media outlet as to try to make sense of what is currently taking place in the economy and try to match up its implications as represented in the “markets.” It’s now a fool’s errand. For the markets no longer represent anything of what was looked upon as “a gauge of business health” as they were only a decade ago.
All you’ll hear currently is nothing more than cheerleading i.e., “New all time highs!” is once again the daily clarion call. When it comes to why? The analysis more often than not is nothing more than further cheerleading via some next-in-rotation fund manager trying desperately to argue why “Stocks are not expensive compared to blah, blah, blah.”
It’s now far past annoying and borders on deranged in my book.
However, with the above said business people must somehow extrapolate what their gut tells them, then try to filter it the best they can with what they consider the best information possible. Even if that information isn’t what they might deem as the most reliable.
Sometimes you just need to understand that you may be feeling a certain way because there are legitimate reasons for it. Although, at the time, you just can’t seem to put a finger on exactly why, but you know instinctively – that it’s there.
So you search. Even though (you know) that search can at times lead to nowhere – search you must. It’s part of being a business person. It comes with the territory, and most will never understand it. That’s what sets a business owner/person apart from most. They can’t just sit back – ever. They need to either know – or die trying.
The reason why I state the above is the result from a call I had with a colleague, where the conversation was more like the two of us trying to figure out a Rorschach test, rather than anything else.
So after we were through I started doing a little investigating for the conversation weighed on me well after. This is what the conversation revolved around…
The old saying of “Sell in May and go away.” came up as we were discussing a few points, but it was more in jest than anything else, for we were joking “This ‘market’ will probably go even higher if WWIII breaks out in earnest!”
But the argument of “May” kept revolving around the conversation when we were talking about how, just last month, the Fed. was declaring how it wasn’t “terrified” when rebutting arguments that it should to the contrary. I made the point then “Yeah, that’s because it’s only April!” and the full effects of the rate hikes have yet to be factored in.
So, as I iterated, when the conversation ended I decided to take a look, below is what I found. To wit:
As you can see I made a few notations on the above chart. If one looks closely the month of “May” has been a very important month over the last decade. The only time “May” wasn’t a factor was when QE3 was announced and the Fed’s intentions were leaked for Wall Street’s understanding (the leaking of such admitted to and causing the resignation of a Fed. president.)
Maybe “Sell in May and go away” when the Fed was not involved was one thing. However, today?
May has been the month where the “markets” began to roll over in earnest ceasing only once the Fed. launched another iteration of QE.
And the reason why some are feeling a little apprehensive? Hint: You are here = May.
So, for what it’s worth, you’re not crazy. You’re a normal thinking person, congratulate yourself for being such. For what happens next is still anyone’s guess. But a least take solace in the fact – It’s not you. There’s a real reason why your gut is giving you that check. Feel grateful it’s working as it should.
© 2017 Mark St.Cyr