The old adage of sell in May and go away did not pan out for the bears. May was positive and June is starting out the same. It is important to evaluate what our game plan is for the summer and the rest of the year. If we pay attention to the three primary indicators monetary, psychology and valuation tells us that for all times in the last 40 years that we’ve had the exact same criteria, in 100% of the cases you had a positive return in the next 12 months. In fact the average return for the next 12 months is 10.77% with the maximum of 32.03%.
Now I already hear the bear’s mantra of; ”this time it is different.” I have had people accuse me of being the proverbial bull, but I find no accuracy in this accusation. Coming into 2008, I had a very different outlook on equity investing. One of my Rileyisms when someone asks me about the market and they are NOT one of our clients I respond with “the market will continue to go up until it decides to go down.” Argue with that! I am never afraid to invest in equities when the stars (indicators) are aligned as positively as they are now.
What is really holding the markets back is the domination of the risk-adverse investors in the public arena. Waiting for a pullback in the equity market to get in is like watching paint dry. By the time you figure it out its too late or too early and disappointments abound. You just have to go ahead and touch the wall and chance a finger print you can always touch it up.