QE Trumps Seasonality
By Hilary Kramer, GameChangers
You’ve probably heard the old adage: “Sell in May and go away.” But this year? I don’t think so.
I’m sticking around for two main reasons. First off, much of the selling the past three years was caused by the European debt crisis, and while Europe’s debt problems haven’t gone away, they are being better managed. Second, there is a chance that we could see all three major central banks (the Federal Reserve, the Bank of Japan, and the European Central Bank) engage in quantitative easing at the same time (two of the three have already announced QE). Quantitative easing is arguably the single biggest factor behind the market’s run to all-time highs, and the fact that the three major central banks of the world could have it going at the same time makes things very different from the last three Mays.
Having said that, I do plan on staying away from gold and the high-end consumer discretionary sector. We don’t have to worry about inflation just yet — which is why people invest in gold in the first place — and the current gold bubble still hasn’t completely popped. As for the high-end sector, consumer confidence is still hurting, so customers are going to stay away from the expensive retailers and gravitate to stores where they can buy more for less.
In this kind of market, I will be focusing on stocks with solid and predictable earnings growth, strong catalysts and exceptional long-term opportunities.