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Sell in May? Maybe not this year

The worst six months of the year are here, but the start to this year has been one of the worst ever. This week in the LPL Market Signals podcast, Jeff Buchbinder and Ryan Detrick discuss just how bad this start has been, why there is still potential for gains. They also break down the upcoming worst six months of the year, while also discussing the upcoming Federal Reserve Bank (Fed) meeting.

One of the Worst Starts to a Year Ever

This is the worst start to a year for stocks since 1939, based on the S&P 500 Index (and its predecessor the S&P 90). Ryan points out that other previous worst starts ever did see some large comebacks, so that’s the potential good news. However, what makes this pullback so rough is that bonds (as measured by the Bloomberg U.S. Aggregate Bond Index) have been hit hard. Jeff adds that a diversified portfolio isn’t getting much protection from bonds this time around. Overall though, with it appearing like there is no recession on the horizon, a potential peak in inflation (and therefore yields), a healthy consumer, and a potential truce in Ukraine, there are many reasons to think stocks could come back before this year is all said and done.

Sell in May is Here, Should You Do It?

The worst six months are here, but as Ryan notes, these next six months have been higher nine of the past 10 years. Jeff adds that overall sentiment is quite low and this could lead to a surprise rally once again. Ryan chimes in that maybe once everyone started to notice these months are usually weak, that is around when it stopped working. Bottom line, the strategists think a major low could be near and a surprise rally is possible.

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Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the U.S. and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Podcasts, or Spotify and find us on the LPL Research YouTube channel.

 

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Stock investing includes risks, including fluctuating prices and loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.

The Bloomberg U.S. Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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