Sell in May and Go Away?

On average, since 1950, May 1 through October 31 is usually not so great
for stocks, while November 1 through April 30 tends to be more positive.

The seasonal tendencies can provide a good backdrop for you to consider
your investment decisions but they have to be also taken within the
context of whatever else is going on in USA and the whole world.

This Tuesday Fed is widely expected to increase the interest rate again by
25 basis points to 3%. The Fed is expected to continue raising interest
rates at least through June, due to the pressures from higher energy
prices and other inflationary trends. It would be the eighth consecutive
quarter-point increase in the fed funds rate since the Fed starting raising
rates from a 40 year low of 1% last June.

Also, as the recent weak retail sales and slide in first-quarter gross
domestic product growth and also the lacklustre growth in job-market
make clear, it is not unreasonable to have fears about an economic
slowdown. The first quarter GDP data, where growth rose at a 3.1%
annual rate, its lowest rate in two years, shows higher energy costs are
dampening business spending and pushing up inflation at the same time.
Even though the oil price has reduced a bit in last week, we donot expect
it to be at a low level in summer months.

Such an environment is certainly not likely conducive to stock gains.
However, we need to realize that the economic growth will not completely
halt. It might slow down and we need to lower our expectation from
stocks. All we need to do is to continue investing in good ETF or mutual
funds at a steady rate with proper diversification in mind. If prices really
fall, it is a good opportunity for dollar-cost averaging.