We are reminded each year of the Wall Street Saying, Sell in May and Go Way. Stocks enjoyed stellar gains (average total return of 18.7% for Russell 3000 Index members) during the Nov. 2023 – Apr. 2024 seasonally favorable period, but I suspect the sharp decline in the last month of this period had many folks wondering if they should follow that advice.
Happily, nearly a century of market history suggests that bailing out of stocks on the basis of the calendar, on average, would be hazardous to investor wealth. The historical data shows Value Stocks have enjoyed positive absolute and relative returns, on average, during the seasonally less favorable May-to-October periods, so I see no reason to make any changes to a long-term asset allocation.
TIME IN THE MARKET TRUMPS MARKET TIMING
And data from DALBAR’s just-released 2023 Quantitative Analysis of Investor Behavior report once again supports this view, showing that mutual fund investors have fared poorly going it on their own.
According to the report, fixed income mutual fund investors were the worst offenders (having been better off putting their money in the mattress!), but equity mutual fund investors aren’t a whole lot better, illustrating that many should have zigged when they instead zagged.
Recent experience is in favor of the same as stocks gained ground all five days last week, capping the second straight up week since the American Association of Individual Investors (AAII) weekly Investor Sentiment Survey saw more pessimists than optimists!
Kovitz Investment Group Partners, LLC (“Kovitz”) is an investment adviser registered with the Securities and Exchange Commission. This report should only be considered as a tool in any investment decision and should not be used by itself to make investment decisions. Opinions expressed are only our current opinions or our opinions on the posting date. Any graphs, data, or information in this publication are considered reliably sourced, but no representation is made that it is accurate or complete and should not be relied upon as such. This information is subject to change without notice at any time, based on market and other conditions. Past performance is not indicative of future results, which may vary.