We are reminded each year of the Wall Street Saying, Sell in May and Go Way.
Stocks enjoyed stellar gains (average total return of 18.7% for Russell 3000 Index members) during the Nov. 2023 – Apr. 2024 seasonally favorable period, but I suspect the sharp decline in the last month of this period had many folks wondering if they should follow that advice.
Happily, nearly a century of market history suggests that bailing out of stocks on the basis of the calendar, on average, would be hazardous to investor wealth.
The historical data shows Value Stocks have enjoyed positive absolute and relative returns, on average, during the seasonally less favorable May-to-October periods, so I see no reason to make any changes to a long-term asset allocation.
TIME IN THE MARKET TRUMPS MARKET TIMING
And data from DALBAR’s just-released 2023 Quantitative Analysis of Investor Behavior report once again supports this view, showing that mutual fund investors have fared poorly going it on their own.
According to the report, fixed income mutual fund investors were the worst offenders (having been better off putting their money in the mattress!), but equity mutual fund investors aren’t a whole lot better, illustrating that many should have zigged when they instead zagged.
Recent experience is in favor of the same as stocks gained ground all five days last week, capping the second straight up week since the American Association of Individual Investors (AAII) weekly Investor Sentiment Survey saw more pessimists than optimists!
This is a condensed version of a full-length article posted 5.13.2024 on theprudentspeculator.com. The Prudent Speculator’s weekly commentary is curated each week as a valuable resource for recent stock market news, investing tips and economic trends. To receive regular reports like this one along with free stock picks sign up here: Free Stock Picks – The Prudent Speculator.
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