Tuesday, May 31, 2011


There is an old saying in the investment world, "In May, go away," meaning cut back on stock investing in the month of May and look towards the fall for things to pick up.  While that may seem, at first blush, to be good advice, since historically the stock market tends to under perform from May through October, to me it seems a bit counter intuitive.  If you know ahead of time the stock market tends to lag during 5 months of the year, in this case June through October, wouldn't that be just the time to make or add to your long term investments?  While you may not make any quick gains from price movements, in the long run you should do well.  At least that's my theory.  I've been taking advantage of the summer months, to add to my long term dividend stocks, for quite a few years now and it has always worked out well for me.

There have been years when this strategy was ineffective, since on occasion the market has continued to rise after the month of May all the way through October, so it's not a fool proof plan.  At the same time, when the market does lag, you still have to do your research and buy quality stocks if you hope to benefit when things pick up in the fall/winter season.  Either way, if you're buying stocks at a price your comfortable with, you should come out O.K. in the end.  So rather than follow the "in May, go away" train of thought, this is when I start looking for bargains in the stock market.  With a little luck and a lot of research, sometimes you find some big winners!  (Post #350) 

No comments: