There’s an old Wall Street adage, ” Sell in May and Go Away.” It’s based on the fact that over the long term, the best six months to be in the market are November thru April. There is some pretty impressive research that validates this theory, that the May thru November period is the weakest period for equities. There are traders that base their investment process on remaining in cash during this period and buying stocks in November; holding them thru May 1st. The late Sy Harding has written a couple of good books on this subject, providing a great deal of back-testing and research to add merit to this seasonal trade. This year I am buying….
I just returned from vacation last night and holding lots of cash. I am anxious to put some of this cash to work while the markets are in the midst of a correction. I believe the recent selling is based on headline risk, and that within a few months the indices will be on their way to new highs. It won’t surprise me if the S&P 500 actually heads to the 3200 area from here, sometime in the next 10-12 months. I am no prognosticator so don’t base your own investment decisions on my opinion.
Having said that, I did quite a bit of buying in the past few minutes. My wife and I went grocery shopping earlier this morning (to replenish our food, we had a bare refrigerator prior to our vacation, now we’re back and we are back to ultra-healthy eating!) and when we returned I logged into my Charles Schwab account and was excited to see the markets trading down. This presented the opportunity to dive into some ETF’s at great prices. In fact, I invested $240,000 of my cash holdings in ETF’s. I purchased the following names (at the time the DOW was -270 points!): $MDY, $PRF, $RFV, $SGOL, $RFV, $VDC & $VOOV. This provides me with a little Gold ETF exposure while spot gold trades near $1300/ounce. I mentioned a previous post that I am not a fan of “paper gold” as I am into owning physical bullion. In the case of my purchasing $SGOL, this is a trade, and I don’t consider it a core holding as I do my bullion. Besides, at Schwab this ETF is offered at zero commission. The other purchases I made offer me exposure to Midcap stocks and Consumer Staples, which I feel are undervalued at present and offer tremendous upside (as well as the REIT’s I currently own). With today’s buying my equity exposure in my overall asset allocation is still fairly low, currently at 35%. That is what I consider a very low equity exposure for just about anyone, especially someone still a few years from retirement. I am very risk-averse and this is exposure to equities is representative on my caution.
DISCLAIMER: THIS IS NOT ADVICE! I am not an investment advisor, nor a professional in the financial services industry. Stock market investments and ETF’s do have risks. This blog is for informational purposes only and the reader is 100% risk responsible for any and all trades and investments made.