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LPL FINANCIAL RESEARCHWeekly Market CommentaryJune 1, 2010v4Buy in June and Stay TunedThe old adage of “sell in May and go away” has been repeated so many Jeffrey Kleintop, CFAtimes we are still often asked if this is a sound investing strategy. We do Chief Market Strategist not find sound reasoning behind this maxim. Instead, we believe investors LPL Financialshould “buy in June and stay tuned” this year. We expressed caution in mid-April, given our outlook for a pullback in the stock Highlights market. However, now that the pullback that began on April 23 has occurred, “Sell in May and go away” only works about we have spent most of May calming fears of another stock market plunge one-third of the time. With a pullback having and, in general, we believe this is a good opportunity to buy stocks rather than already taken place, we find little value in this sell. Unfortunately, investors cannot simply buy now and go away since the old adage.headwinds for the economy and markets are increasing during the second We believe investors should “buy in June and half of the year. Investors must stay tuned to the transitioning conditions stay tuned” this year. for economic and profit growth warranting a tactical approach to portfolio Staying tuned to the conditions in the management.economy and markets will be important to The reasoning behind “sell in May and go away” stems from the historical investment decision making in the coming months as the ...

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• Publié par: Lekos
• Nombre de lectures: 19
• Langue: English

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v4

L P L F I N A N C I A L R E S E A R C H

Weekly Market Commentary

Jeffrey Kleintop, CFA Chief Market Strategist LPL Financial

Highlights   “Sell in May and go away” only works about onethird of the time ith a pullback haing already taken place we find little alue in this old adage   e beliee inestors should “buy in une and stay tuned” this year   Staying tuned to the conditions in the economy and markets will be important to inestment decision making in the coming months as the economy transitions from a recoery to sustainable growth

June 1, 2010

Buy in June and Stay Tuned

The old adage of “sell in May and go away” has been repeated so many times we are still often asked if this is a sound inesting strategy e do not find sound reasoning behind this maim nstead we beliee inestors should “buy in une and stay tuned” this year

e epressed caution in midpril gien our outlook for a pullback in the stock market oweer now that the pullback that began on pril  has occurred we hae spent most of May calming fears of another stock market plunge and in general we beliee this is a good opportunity to buy stocks rather than sell nfortunately inestors cannot simply buy now and go away since the headwinds for the economy and markets are increasing during the second half of the year nestors must stay tuned to the transitioning conditions for economic and profit growth warranting a tactical approach to portfolio management

The reasoning behind “sell in May and go away” stems from the historical eidence that stock market returns on aerage are weaker oer the si months from May through ctober by about  oweer returns during this period hae been positie about twothirds of the time in the post period This means one should only “sell in May and go away” onethird of the time e beliee  warrants a different strategy Se In Ma an o Aa Hora Performane SP 00 Pre Performane Sne 14 Ma 1Nov 0 Nov 0Ma 1 Average 2 2

 Negave



2

oa  11 or Pero 20 0 Soure LPL Fnana, oomberg 0/2/10 e SP 00  an unmanage ne,  anno be nvee no re Pa erformane  no guaranee of fuure reu Staying tuned to the conditions in the economy and markets will be important to inestment decision making in the coming months as the economy transitions from a recoery to an enironment of sustainable growth These economic transitions are often uneen as the driers of growth shift from goernment policy to priate businesses while the leading indicators of economic actiity peak and momentum begins to slow

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 E E  L M A R  E  C  M M E N A R 

e beliee the market is due for a rebound as we stated last week in our commentary entitledTen Reasons for a Rebound oweer the rebound is likely to be followed by more olatility as headwinds arise in the second half of the year for seeral reasons   s the Fed signals coming rate hikes    China’s economy begins to respond to the efforts to slow the pace of growth   Policy stimulus fades in the nited States leaing behind the drag of a huge federal budget deficit   urope’s growth and solency problems continue   s economic indicators peak in the nited States during the second uarter economic momentum begins to slow nestors must stay tuned this summer to find attractie opportunities when presented and successfully take profits when necessary e will be watching the LPL Financial Current Conditions nde closely for the impact of these headwinds on economic and market conditions IMPRAN ISCLSRES e onon voe n  maera are for genera nformaon on an are no nene o rove efi ave or reommenaon for an nvua o eermne  nvemen ma be arorae for ou, onu our finana avor ror o nveng A erformane referene  ora an  no guaranee of fuure reu A ne are unmanage an anno be nvee no re So nveng nvove r nung o of rna e Sanar  Poor’ 00 Ine  a aaaonege ne of 00 o egne o meaure erformane of e broa ome eonom roug ange n e aggregae mare vaue of 00 o rereenng a maor nure

 reear maera a been reare b LPL Fnana

e LPL Fnana fam of affiae omane nue LPL Fnana an ES Fnana Serve rou, In, ea of   a member of FINRA/SIPC o e een ou are reevng nvemen ave from a earae regere neenen nvemen avor, eae noe a LPL Fnana  no an affiae of an mae no rereenaon  ree o u en

No FIC or NCA/NCSIF Inure  No an or Cre non uaranee  Ma Loe aue  No uaranee b an overnmen Agen  No a an/Cre non eo

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