May Is A Sinkhole For Investors
May was a bad month for investors...a very bad month. US Stocks were down about 8% for one or all of the following reasons: (a) European debt concerns (b) Korean tensions (c) more sellers than buyers/May 6th Flash Crash (d) all of the above.
I discussed the May results with CBS3 this morning:
Here's the month's tally (all indexes are down 0.5-2.8% on the year):
- Dow down 7.92%, the worst May in percentage terms since 1940
- S&P 500 fell 8.2%, the biggest monthly drop since February 2009 and the worst May since 1962
- NASDAQ tumbled 8.3%, its worst May since 2000
It's true that statistically, stocks have risen more from November through April, than from May through October. BUT, the theory is highly dependent on when to sell (did you sell the first day of May or on May6th during the "Flash Crash"?); when to buy back in; whether investors have the discipline to stick to the theory (you could be tempted if the market were to move against you); or when "sell in May" could be upended (there's always a year when the theory doesn't work).
So keep your diversified portfolio and prepare for a bumpy ride today and the rest of the week. Here's what you need to know:
- There are concerns that the global economic recovery is waning--comments about a potential slowdown in China fueled early selling
- European debt is its own sinkhole
- Car sales should show an 11% increase from the previous month
- Chain store sales should show steady, though not stellar results, especially after last week's personal spending report
- The May employment report-could show as many as 500K new jobs, of which nearly half could be temporary census hires