'Sell in May and Go Away'... But Don't Go Away?

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May 1 (Bloomberg) -- Bloomberg’s Julie Hyman and Sam Stovall, chief equity strategist at Standard & Poor’s, examine the viability of the “sell in May and go away” stock strategy in “On The Markets” on Bloomberg Television’s “In The Loop.”

Strategist at standard & poor's. first of all, how often does a work?

I think the adage sell in may and go in -- go away is wrong.

You should gravitate toward defensive areas.

Since 1990 is, if you moved toward consumer staples and health-care care sectors in may to october 30 oh and back in the market november through april you would have averaged added an average of three percentage points per year to the s&p 500 return while actually reducing the volatility.

The sell in may, i don't think you should go away.

The only six-month period in the full four-year cycle that posted an average decline in this may through october period.

Let's talk about some of the other specifics of this year, namely some of economic indicators which do seem to be improving.

You would think in that environment the cyclicals would actually perform better if you look at that metric and that overlay the historical comparison.


I think you are better off focusing on quality at this point.

This has been pretty much a low-quality led rally.

Over the past year, low-quality stocks, meaning those that had poor consistency of raising earnings and dividends traditionally more from the more cyclical areas have been -- beaten the higher consistency ratings by a good 10 percentage points.

The fact now is these low-quality stocks are trading at 36% premium to the projected pe's of the higher-quality stocks so i think you're much better off sticking toward stocks, gravitating toward defensive and if you can, aim for the high quality issues.

If you are going to gravitate away from stocks and reallocate, what is your best bet in terms of other asset classes?


The barclays aggregate since 1977, when the full year cycle low in the midterm election year was up 12 and half percent on average and rose 100% of the time versus the s&p's gain of only 1.3% and rising an average 56% of the time.

Bonds really have been the place to go in the sale in may period in the midterm election.

Even given the fed and where

This text has been automatically generated. It may not be 100% accurate.


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