sell in May?1 May 2014 22:46
Hello George. I can't say I have an opinion about the level of the Dow, I haven't given it much thought lately. You may be right though. I think the "sell in May and go away" can a bit self fulfilling in that if folk think there is something in it then they may well sell to be on the safe side and in so doing help to push the market down.
This is what the Naked Trader has to say from his book "How anyone can make money trading shares":
May-June: "Sell in May and come back on St.Ledger's Day" - There is a bit of truth in this as May can be the start of some under performance. In recent years it has been challenging September to become the weakest month of the year. 2006 saw a large fall in stocks, though 2007 wasn't too bad. Still, it's time to perhaps be wary, take some profits and keep cash in hand. June is pretty much as weak as May - usually it's the third weakest month. And July generally isn't that much better!. So, in summary, May-June ain't great. Maybe time for a holiday!.
August - From the gloom of the previous few months there usually comes a great August.
Of course a lot of people are away, which for a start means there is always a lot less volume. So what happens is that shares can move much faster than normal on far fewer trades.
According to market historian David Schwartz, August is the third best trading month of the year: "Good gains can often be achieved in August. But of course with the volatility you have to get the right entry price."
I agree with David; I often find I can make a lot of money in August. However, beware too, because of the volatility of August 2011 proved a disaster as shares fell a lot.
One thing to look for is companies reporting in August. There aren't many, but if you find one that produces a strong statement, you often find the share price responds very well on smaller volumes.
Also it is worth looking at companies reporting in early September; August is a good time to get in early in the run up to the results.
End of article from book, before I get done for copyright!.
There are some good economic figures coming out of the States and the UK economy is improving (so we are told, although on the ground it isn't always immediately apparent). There are other factors out there which of course could push the market down, one of which is the tension between Ukraine and Russia. I know from reading the latest Naked Trader blog from yesterday that he is a little cautious of what may happen this summer and reduced some of his positions. All I would say is I think it is a good time to reassess our portfolios and think seriously about cutting out our losses and concentrate on the strong performers. I am not sure this is a time to invest in speculative companies. From all that I can research I believe CLL is strong, although no company is immune from greater macro economical influences.
Good luck and regards to all
CM
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