Sell in May; Buy in November

There is an old market theory that May through November is the weakest part of the market, and November through April is the strongest part of the market. Although I do not believe in market timing; historically about 77% of the time this has shown to be true.

Many retail investors are still in cash or have taken false refuge in fixed income. With a dangerous overhang of capital loss in the bond market and cash having a negative return, equities look very attractive at this point of seasonality.

Yes, we still have a wall of worry in front of us such as: who is going to be President, the impending fiscal cliff and the usual market unknowns. However, equities are still undervalued based on historical averages and as long as rates stay around these levels, equities are the only way to grow a portfolio. The climate of uncertainty will not immediately change with an election next Tuesday, no matter who wins. Problems we are facing now will remain and the solutions from either candidate will be similar. Fixing the fiscal cliff is more important that who is elected. Then, the impending debt bomb will have to be dealt with.

The market is the great humiliator, so having your portfolio highly diversified with a discipline of rebalancing is the only answer to waiting to see election results or the probable delay of the fiscal cliff. The market never forgets that over the last twenty years the direction of the averages has been up. Investors only remember the down years.


About billriley

Chief Executive Officer, Chief Compliance Officer A co-founder and shareholder, William Riley is a 33 year industry veteran, who observed, many years ago, that over time institutional investors typically outperform individual investors while accepting less risk. In his role as Chief Executive Officer, Bill works tirelessly to make the wealth management strategies used by the world’s wealthiest families and largest institutions available to our firm’s individual clients. Bill combines fundamental and technical analysis to minimize investment portfolio risk and maximize potential returns. He uses a variety of non-correlated asset classes, including alternative investments, to minimize portfolio volatility and seek absolute returns in down or flat markets. Finally, Bill believes in a comprehensive approach to wealth management that fully coordinates and seamlessly integrates portfolio management, risk management and asset protection, trust, estate, tax and charitable planning. Prior to co-founding Riley Wealth Management ,LLC, Bill held management positions at Merrill Lynch, UBS, Raymond James, Paine Webber and J.C. Bradford. Bill founded Fort Worth branches for Raymond James and J.C. Bradford. Prior to entering the financial services industry, Bill ran his families closely held businesses. Bill’s experience operating family businesses combined with his wealth management experience makes him uniquely qualified to advise entrepreneurs and business owners on a variety of matters including complex and sensitive issues relating to business succession. Bill’s degrees and designations included a Masters Degree in Business Administration (MBA), the Chartered Financial Consultant designation (ChFC), the Chartered Life Underwriter designation (CLU) and the Wealth Management Specialist designation (WMS). A Fort Worth native, Bill is a TCU alum and active in many civic and charitable organizations. Bill and his wife, Marsha, now reside in Colleyville, and they have four grown children and four grandchildren. When he is not working on portfolios or studying financial markets, Bill can be found on the golf courses of Ridglea Country Club.
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