The Question That Comes up Every May
NEW YORK (TheStreet) -- The charts below offers some pretty compelling evidence that the old Wall Street chestnut "Sell in May and walk away" has some currency.
These charts, with data courtesy of Bloomberg, are probably some statistician's dream.
Nonetheless, I think another Wall Street mantra trumps the "sell in May" theory this time. Specifically: "Past performance does not guarantee future results." Here's why this summer could be different (notice I did not say, "is different," perhaps the ultimate statement of hubris. If you are in your 20s, ask your parents about the first Internet bubble.)Here's my reasoning. First, this is now the 13th straight quarter of better-than-expected corporate earnings. Eighty percent of S&P 500 companies have reported above analyst estimates, and earnings have been up 11.4% year over year. Second, this is an election year. During elections years politicians give or engineer goodies for voters: lower unemployment, lower gas prices and more funding for education. Apparently, the strategy works. Since 1932, the median gains during election years has been as follows: May: 1.09%; June: 1.88%; July: -0.67%; August: 0.87%. If you are a trader or speculator, I'd recommend spending some time trolling for opportunities among either very strong or very oversold consumer staples stocks. The S&P Consumer Staples sector has averaged 4.7% from May to October, while the S&P 500 as a whole has averaged just 0.9%. As always, though, take every financial mantra with a little grain of salt.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV