“Sell in May and go away”

The old adage to “sell in May and go away” could tempt investors even more this year to make some irrational decisions in their portfolios. 

With the Dow Jones Industrial Average down more than 3% since the beginning of May it probably makes even more sense to walk away and get back in October.  After all, we know Goldman Sachs advised their institutional clients nearly six weeks ago to sell their investments in commodities.  And, like clockwork, nearly three weeks later, the market for commodities began to implode as margin requirements for silver were raised causing a huge sell-off.  The price of oil dropped over 10% in one week.  You would have thought the sky was falling.   Get Out!  Be smart!  Don’t be like the foolish investors who stuck around for over 8% pummeling last May.  If only it were that easy to time the markets we would all be rich.

A more prudent strategy would be to make investments decisions based on your own individual goals and risk tolerance.  Yes, I realize this concept is not as exciting as preaching the world is coming to an end, but it actually makes for a better investor.  Let’s face it.  If we could all time the market none of us would have been caught up in the crash of 2008. 

Still thinking about selling all of your commodities in your portfolio?

Well, now we understand Goldman Sachs is reversing its bearish call in April.  According to report in “Seeking Alpha” on May 24^th, Goldman Sachs suggested buying oil, copper and zinc, reversing last month’s call to sell commodities. ‘The risk/reward once again favors being long commodities,’ Jeffrey Currie, head of commodities research at Goldman Sachs in London, wrote in an e-mail.

Goldman Sachs’ reversal on commodities is good news for all of those investors who didn’t follow the herd.

Whether “selling in May and going away” until October is just some silly superstition or a real factor for investors is debatable.  What is not debatable is to figure out what makes sense for you individually and to invest accordingly.