April was an “okay” month for equity investors but a challenging one for bond investors. The S&P was up modestly, at 0.38%, but the Bloomberg Barclays Aggregate Bond Index declined 0.74%. As we write this, earnings season is more than halfway over. Generally speaking, companies have reported results that met or exceeded expectations and provided guidance more or less in line. The outlooks have varied somewhat but seem satisfactory overall.
It is around this time of year, when April rolls into May, when we see a number of articles opining on the wisdom, or foolishness, of “sell in May, go away.” There will no doubt be years when selling in May will be the right move, and while this will be obvious in hindsight, there will also be a number of years when selling in May will be the wrong move.
At its core, the whole idea of “sell in May” is a market timing strategy, which is something we do not generally subscribe to. Our goal is to compound wealth over the long term, and in our view, market timing moves are more likely than not to interrupt this process for the worse. As a result, we do not alter our course based on the calendar but instead we make deliberate changes to portfolios based on a long-term time horizon, assessment of prospective returns, and relative merits of a given investment.