Blog PostsMonthly Newsletters Staying Protected as Vacation Season Approaches

As the summer season approaches and you’re getting ready to go away for vacation, you might start to hear the old “Sell in May and go away” investment adage come up.

As the rhyme suggests, investors are much more likely to be traveling or spending time on the beach than behind a computer screen during the summer months.

Unfortunately, like all cookie-cutter financial planning advice, following the “Sell in May” strategy could hurt your returns in the long term.

Here’s what you need to know about staying protected as vacation season approaches.

01  MAKE THE BEST OF THE “SUMMER SLUMP”

For generations, the warning of “Sell in May and go away” has convinced many investors to divest in May and practically disengage with the markets until the autumn months, typically waiting to reinvest until November.

Like all axioms, “Sell in May” has a kernel of truth to it. Historically, the Dow Jones Industrial Average posts lower returns from May through September, the “summery” months.

However, since around 2013, the performance of the “Best Six Months” seasonal strategy — investing from November and selling in May — hasn’t been as reliable as it has been in the past.

From 1950 to around 2013, the Dow Jones Industrial Average did, indeed, show lower returns from May through October compared to November through April, but since 2013, the data shows that trading seasonality is waning.

02  AVOID COOKIE CUTTER FINANCIAL STRATEGIES

“Sell in May” and other similar cookie-cutter financial strategies aren’t suited for every investor, and we don’t believe in “timing the markets.”

Investors who try to time the market with the “Sell in May” cliché can cause more harm than good.

For example, when investors pull out of the market in the summer months, they miss out on the opportunity to take advantage of strong summer runs.


Rather than attempting to time the markets, we feel our efforts are better spent helping custom-build all-weather portfolios for our clients.  Regardless of your season of life, a properly constructed and actively managed portfolio is essential to long-term success.


03  MANAGING RISK AND VOLATILITY IN THE SUMMER

When it comes down to it, clever rhymes aren’t investment strategies, and divesting every May based on market speculation can hurt your long-term returns. That’s why working with a trusted advisor is so important.

At Head Investment Partners, our team of wealth management professionals carefully evaluate risk management and effective diversification to ensure that even during seasonal slowdowns, our clients’ investment portfolios are protected.

If you’d like to learn more about Head Investment Partners’ investment philosophy, schedule an appointment with us.

 

Reliability of Sources The articles and opinions expressed in this document were gathered from a variety of sources, but were reviewed by Head Investment Partners,LLC prior to its dissemination. All sources are believed to be reliable but do not constitute specific investment advice. In all cases, please contact your investment professional before making any investment choices.

Return on Products The return assumptions are not reflective of any specific product, and do not include all fees or expenses that may be incurred by investing in specific products. The actual returns of a specific product may be more or less than the returns used. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to directly invest in an index. Financial forecasts, rates of return, risk, inflation, and other assumptions may be used as the basis for illustrations. They should not be considered a guarantee of future performance or a guarantee of achieving overall financial objectives. The return and principal value of the investments will fluctuate so that, when redeemed, they may be worth more or less than their original cost. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment.

Opinions Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision.

  • This field is for validation purposes and should be left unchanged.