Go Away in May?
It's May already. That was quick! So now is the time to decide whether you believe in the old adage: "Sell in May and come back again on St Ledger's Day." (That's sometime in September I think!)
The reason for the adage is that stocks are reckoned to do not so great in the summer months, so you might as well sell up now and come back later in the year. Of course the saying isn't really true - there's no real evidence to say this is good advice. Some summers have seen good gains. And in fact many crashes have happened in the winter months.
However, this year there could be a grain of truth. As we hit May, markets are trading near-highs and they have had an extremely good run. I don't personally believe it's time to cut and run - but I do believe that being in the right stocks could be important this summer.
It might be worth going through portfolios though and cutting anything that looks a touch on the risky side. And I think it's worth banking a few profits this month so that one has a bit of firepower in case there is a sudden downturn. This enables investors to be able to buy back stocks at lower prices.
One thing to remember is this is not the year 2000 - stocks aren't sitting at the ridiculous over-inflated values they were back in those days. However, the mining and precious metal sectors have had an amazing run - I hold a small amount of these types of shares in my SIPP and wonder whether the time has nearly come to bank profits.
Strangely enough, sometimes a sudden two-day crash is much better than a long-term gentle slide. A few hundred points wiped off the FTSE might be painful - but then it could be a great time to get back in at brilliant lower prices.
A slow gentle slide is much worse. It's much harder to know when the slide has ended and also much harder to play. So caution is the watchword. Anyone playing with money they can't afford to lose should think about reassessing portfolios and be more sensible.
I've had some great gains recently. In particular, great results from CSR, which has been rocketing; bought for 639p, the shares are now pushing 1400! I won't be taking the profits yet as these results are so good that there must be more to come.
Also going well for me are Charter, Mouchel Parkman (more good results) and Tullow Oil which seems to have only one gear - up!