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Sell in May or stay?

A stock market saying is "Sell in May and go away" and alludes to the fact that share prices are lower between May and September than in the winter months. To make sure that you don't forget to participate in the stock market again afterwards, there is also the saying "But remember to come back in September"...

Is it better to sit back in the summer and not deal with stocks?

Now, in the first days of this month, it looks a bit as if there might be some truth in this wisdom.

The DAX is hardly providing any positive impetus and the technology stocks are weakening. On top of that, there are plans coming from the US for the suspension of patent rights in the field of vaccines. Furthermore the euphoria for companies in the field of renewable energies is getting lower.

Positive news from some public companies on the successful first quarter of this year has hardly had any positive impact.

So, one could definitely see some fatigue from this, after almost the entire stock market has developed extremely positively over the last few months.

Concerns about the financial and economic consequences of the pandemic are in any case at least present in the background and could be brought into sharper focus as the overall mood on the financial market deteriorates.

This could lead to a sharp correction in share prices, and it would therefore seem sensible to sell shares at the current time in order to re-enter at a lower price later (in September).

However, there are also arguments against this strategy:

  1. Choosing the right time to sell now and buy later after the summer is relatively unlikely. It is quite possible that the expected correction will last much shorter than predicted by means of wisdom and that, for example, at the beginning of July it will again go rapidly uphill. In the current situation, strong easing due to large vaccination progress could provide the impetus for this. As a result, investors could miss a strong rise of stock prices between July and September.

  2. It is very possible that the correction simply fails to materialize. Recently, it has often looked as if now was the time for a sustained downward movement on the stock markets. Nevertheless, it went up again and again afterwards. The skeptics have not yet been able to prevail over the optimists, and there is a serious probability that the optimists will receive even more tailwind from positive news in the near future and that share prices will be strengthened as a result.

  3. In my view, investment decisions should be made on the basis of sound, up-to-date information and not according to the calendar. It is not clear to me why one should not invest in a promising company in the summer in the same way as in the winter, if it appears to be very favorable at that time. If you are always well informed, I am convinced that you have the best chances on the financial market..

However, this does not mean that you have to check the share prices quickly at the pool in order to be successful...

Relaxation and tranquility are also important attributes in the stock market.

And where is the best place to get these ones?

Exactly! 😎☀️

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