Sell in May?
We understand if you’re tempted to follow the old saying about selling in May then going away – the S&P 500 is up over 8%, and there’s still lots to resolve before we find balance on a number of topics that got us into a bear market in the first place. Let’s recap:
Higher interest rates fueled some bank troubles, the Federal Reserve (Fed) hiked rates another 75 basis points, and we have yet to see the lagging effects of monetary policy tightening. Additionally, the U.S. government risks defaulting on its debt for the first time, and there’s still heightened geopolitical risks hanging around.
So, yeah … a summer vacation from investing looks tempting.
Before you go anywhere, though, remember that time in the market, not timing the market, is critical for long-term investment success. If you sold the S&P 500 in May and went away until November in each of the past 20 years, you would have missed out on nearly 2% in average growth each year. Further, missing the 10 best trading days of the past 20 years would have reduced your annual returns by 4.2% (annualized).
For now, we’ll have to weather uncertainty and volatility, but we’re looking for signs of balance as the year progresses.