Thanks to the Holderness family—social media stars among parents for their funny parodies (Christmas Jammies, anyone?)—the craziness of May now has a name: Maycember…because it is just as busy (if not busier) than December but without all the holiday lights:
Holderness family…#truth. 😊
It seems like May is a crazy month for everyone. Even the stock market hates May. So far, since May 1, 2019, the S&P 500 is down 2.88%. There is an old adage, “Sell in May and go away,” and it is hard to deny that it has a little bit of truth to it. Since 1928, if you had only owned the S&P 500 between the months of November to April, you would have had far superior returns than if you only owned it between May to October:
Those figures come from Bespoke Investment Group and seem to paint a dire picture of the summer stock market. However, digging further, Bespoke found that even though the summer stock market performance was weaker than the other months of the year, it was still positive over 60% of the time:
While we would not recommend an all-or-nothing strategy like “sell in May and go away”, we do think it is wise to take a good look at the underlying economy and check the level of risk present in your portfolio. Across the economy, signs of weakening are present—per Schwab’s chief economist, Liz Ann Sonders:
“Unfortunately, we are starting to see some cracks under the surface of the economy. Initial unemployment claims is a key leading economic indicator, and they’ve been ticking up over the past few weeks; while the Institute of Supply Management’s (ISM) Manufacturing and Non-Manufacturing Indexes were both weaker than expected in April; with notable weakness in manufacturing new orders…inflation could start to rise given the tight labor market, so investors should remain disciplined with an eye toward rebalancing in the face of volatility. Trade remains a weight on the confidence of business leaders, and if the dispute with China continues to escalate, stocks and the economy would likely suffer further.”
So, knowing the summer months have historically been volatile with meager reward, we’d recommend a good review of your portfolio to be sure the risk level is appropriate for you. If you’d like help, below is a link to our risk review tool—feel free to use it to see the risk currently in your portfolio!
Have a Merry Maycember!