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Time to Sell in May?

Time to Sell in May?

April 30, 2020
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One of the best known investment axioms is to “sell in May and go away.” This is largely because these six months have historically been some of the worst six months of the year. As you can see below, the next six months have tended to be on the weak side.

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As shown in the LPL Chart of the Day, the next six months have indeed been the worst six months of the year, up only 1.5% on average. To add injury to insult, we are leaving the six most bullish months of the year.

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“Stocks are up more than 30% from the March lows, suggesting a well-deserved pullback during these troublesome months is quite possible,” explained LPL Financial Senior Market Strategist Ryan Detrick.

Here’s the catch, stocks have actually been higher during these worst months of the year seven of the past eight years.

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Right here and now we’d be careful after the record run stocks have seen, as a well-deserved break could be perfectly warranted. But with the dual benefits of record monetary and fiscal stimulus helping to bridge those most impacted by COVID-19, we continue to expect this recession to be one of the shortest on record and a much stronger economy later in 2020.

For more of our thoughts on negative oil, the record stock rally, and earnings season, check out our latest LPL Market Signals Podcast.

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. This Research material was prepared by LPL Financial, LLC. Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates.  To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity. Not Insured by FDIC/NCUA or Any Other Government Agency, Not Bank/Credit Union Guaranteed, Not Bank/Credit Union Deposits or Obligations, May Lose Value. For Public Use – Tracking 1-05004755