Sell in May and Go Away? Our Experts Weigh In

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Sell in May and Go Away? Our Experts Weigh In

Plenty of Worries

jeffreeves110 Sell in May and Go Away? Our Experts Weigh InBy Jeff Reeves, Editor, InvestorPlace.com and The Slant

I place no credence in “Sell in May” superstition for superstition’s sake. But there are a host of concerns right now that lead me to expect a spring contraction in the markets. They include:

  • Front-loaded returns: Traders are already up double digits after a great Q1. Why push it? Do we really think this could be a 20% or 30% up year? If not, then the risk-reward of buying stocks right now isn’t worth it. At best you sit on your hands; at worst you take cash off the table.
  • Growth is stalling: Recent GDP numbers in the U.S. were a cause for concern. But it’s not just us. In Europe, Spain saw a contraction in Q1 and will be lucky to grow at all in 2013, and Germany’s forecast is for a mere 0.5% growth this year. Also, China’s GDP is slowing faster than expected. So much for a global recovery in 2013 … and so much for investor optimism.
  • Weak top lines: The narrative of this earnings season is once again strong profits even as sales miss the mark. A few companies that posted a top-line miss and a bottom-line beat include shipper UPS (NYSE:UPS), telecom AT&T (NYSE:T), financial JPMorgan (NYSE:JPM), chemicals giant 3M (NYSE:MMM), tech giant Google (NASDAQ:GOOG) … and the list goes on. You can’t cut your way to bigger earnings forever.

There are other reasons, too, but these are my three biggies. I’m certainly not expecting a crash and burn, but I’m trimming some winners and keeping my powder dry for the inevitable contraction over this summer.


Article printed from InvestorPlace Media, http://investorplace.com/2013/05/sell-in-may-and-go-away-our-experts-weigh-in/.

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