Investors might want to reconsider following the old adage “Sell in May and Go Away,” according to experts at TheStreet’s Investor Boot Camp conference Saturday.
While U.S. stocks historically do better between November and May than they do between May and October, Mona Mahajan, U.S. investment strategist at Allianz Global Investors said things could be different this year.
Going back through recent history, Mahajan said that there have been eight instances where stocks had a negative first quarter, and in five of those eight stocks also ended up being positive during the next quarter.
“[The period of] May to October is generally weaker,” especially during an election year, but could be different this year because “rates are rising [and] earnings are peaking. … In fact, we may be looking at a peak year in terms of earnings [and] in terms of GDP growth.”
Ann Miletti, senior portfolio manager at Wells Fargo Asset Management, said that in deciding whether to sell in May, “you have to decide, are you an investor or are you a trader?”
Miletti said that investors have to think about the risks of not only selling in May, but also of coming back later that year at the proper time. “To be right twice is difficult,” Miletti said.
She also said that there’s a good chance that the next several months could be good for the market, even though January was tough and stocks have been basically flat since. Miletti added that stocks; recent flatness “is kind of a good thing. We’ve grown into the earnings we’ve gotten, and that’s healthy for the market.” The expert added that she hopes to see earnings grow “and markets slowly reward companies that have that earnings growth.”