Sell in May and go away

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This is perhaps one of the most famous adages in investing lore, and it’s worth a look, because there seems to be a traditional drop-off in the Summer time. Why this would happen is understandable: traders are people and spend more time away from the office during the warm months.

So let’s take a look at a few factors that could cool investor’s heels in the next few months:

• Rising gas prices. The price of gas is up and up sharply this week. The more money people pay for gas, the less they have to spend on everything else. Companies spending more money on gas will pass the extra on to consumers through higher prices. This is a double whammy for the already beleaguered consumer.
• Interest rates are rising. Rising interest rates again hurt the pocketbooks of consumers and businesses alike.
• Credit quality is crumbling in certain sectors.

It’s not all bad news, luckily. There are also sectors reporting excellent earnings and even brighter prospects. Tech seems to be back in a big way. The internet content sector may still have some upside. Mergers are up and IPOs are too. All in all, it’s an extremely interesting time to invest in the stock market.

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