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"Sell in May" and "Go Away" - Please consider…

05/01/2011
As we head into the month of May, much will be made of the adage "Sell in May and Go Away."
 
Before we collectively press the "sell" button and raise "cash," investors must consider some compelling data.  Currently, we are in the third year of a Presidential cycle.  During the third year of the past seven Presidential cycles, selling on the first of May and buying back on the last business day of October hasn't been the correct strategy.
 
Could this year be different?  Sure.  I learned the hard way many years ago that anything is possible in the capital markets.  However, the depth of liquidity within our capital markets certainly allows investors the opportunity to reduce holdings of risky assets, if warranted.  I will be one of the first to make that recommendation if conditions deteriorate.  Until then, stay the course.  The Tailwinds are stronger than the Headwinds.  Please consider:
 
S&P 500® Index during the Third Year of a Presidential Cycle
 
May 1, 2007 1482.37
October 31, 2007 1549.38
May 1, 2003 916.92
October 31, 2003 1050.71
 
May 1, 1999 1335.18
October 29, 1999 1362.93
 
May 1, 1995 514.76
October 31, 1995 581.50
 
May 1, 1991 375.34
October 31, 1991 392.45
 
May 1, 1987 288.36
October 30, 1987 251.79
 
May 1, 1983 164.42
October 28, 1983 163.37



Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.