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There are so many derivations of this strategy that it's hard to keep track but there's not much that worked vs. maintaining equity exposure. But isn't the seasonal until November? There's still time, although the volatility this summer has been so low that it doesn't seem very likely to give up the advantage in the next 3 weeks.
I don't use this strategy and in general don't try to market time, but even the best strategy won't work every year. I think this strategy has a pretty good long term record, no? But lots of strategies work well... until suddenly they don't.
For the first time I tried this strategy with my husband's RMD. Unless, we have a market downturn pretty soon, it isn't turning out so well this year as far as a reinvestment later goes. (I usually just take the RMD in December.)
There are a lot of spins investors can pull form the Sell In May strategy.
I have found, as a retail investor, that the strategy does not work every year; but, for me, it has worked more times than not. In addition, I have found it to be a good time to rebalance thus maintaing neutral positions within my asset allocation. This past May I rebalanced (calendar based) and reduced equities back to what my barometer and equity weighting matrix was calling for, within my asset allocation, and instead of moving to cash or bonds I moved to hybrid funds thus raising my allocation in hybrids.
Since, I am now retired I plan to keep raising my allocation to hybrid funds until they make up about 50% of my overall portfolio. May seems like a good time for me to do this (calendar based). And, since equities have had a good run through the summer and are now richly priced (from my perspective) I plan to just sit this fall and not increase my equity allocation. If equities continue to have their upward run (as I anticipate) come May I'll do another rebalance (calendar based). However, should there be a decent pullback, within equities (three to five possibly seven percent range), I will be putting a little cash to work and raise my equity allocation (another type of rebalance, market based). I call this throttling my asset allocation based upon market movement.
In comparing my current investment posture to a strategy found in baseball that is designed to advance the runners ... it's time to play some small ball. From my perspective, it is not a time, for me, to be overly aggressive for more reasons than one.
The SIM philosophy was very popular on the board several years ago. I never practiced it. But I think it was to some extent a self-fulfilling prophecy. For a few years, anyway, the market appeared to sell off around that time of year.
What I observed happening over several years, however, was that those who practiced the belief began to sell a bit earlier every year to get “out in front of the crowd”. Instead of waiting for the market to tank on May 1, why not play it safe and sell on April 15? Than, some thought they could gain an even better edge by selling on April 1, etc. etc.
Is there seasonality to markets? Probably yes. Tax deadlines may play a part. How to profit from the seasonality? That’s where it gets dicey.
We all have different approaches. To each his own. If doing something a certain way has worked for you over time (per Ol’Skeet) I’d be the last to say change it. Whatever floats your boat!
Comments
But my Lord ... can’t intelligent investors do better than this?
There are a lot of spins investors can pull form the Sell In May strategy.
I have found, as a retail investor, that the strategy does not work every year; but, for me, it has worked more times than not. In addition, I have found it to be a good time to rebalance thus maintaing neutral positions within my asset allocation. This past May I rebalanced (calendar based) and reduced equities back to what my barometer and equity weighting matrix was calling for, within my asset allocation, and instead of moving to cash or bonds I moved to hybrid funds thus raising my allocation in hybrids.
Since, I am now retired I plan to keep raising my allocation to hybrid funds until they make up about 50% of my overall portfolio. May seems like a good time for me to do this (calendar based). And, since equities have had a good run through the summer and are now richly priced (from my perspective) I plan to just sit this fall and not increase my equity allocation. If equities continue to have their upward run (as I anticipate) come May I'll do another rebalance (calendar based). However, should there be a decent pullback, within equities (three to five possibly seven percent range), I will be putting a little cash to work and raise my equity allocation (another type of rebalance, market based). I call this throttling my asset allocation based upon market movement.
In comparing my current investment posture to a strategy found in baseball that is designed to advance the runners ... it's time to play some small ball. From my perspective, it is not a time, for me, to be overly aggressive for more reasons than one.
I wish all ... "Good Investing."
Old_Skeet
What I observed happening over several years, however, was that those who practiced the belief began to sell a bit earlier every year to get “out in front of the crowd”. Instead of waiting for the market to tank on May 1, why not play it safe and sell on April 15? Than, some thought they could gain an even better edge by selling on April 1, etc. etc.
Is there seasonality to markets? Probably yes. Tax deadlines may play a part. How to profit from the seasonality? That’s where it gets dicey.
We all have different approaches. To each his own. If doing something a certain way has worked for you over time (per Ol’Skeet) I’d be the last to say change it. Whatever floats your boat!
Regards,
Ted
Why "Sell In May And Go Away" Is Not Quite So Simple:
https://www.cnbc.com/2017/04/28/trader-talk-why-sell-in-may-and-go-away-is-not-quite-so-simple.html