Sell in May and Go Away? or No Sell in May?? - II

"Sell in May and Go Away" So should we really??  

I did some historical analysis to check the profit/loss during the past 10 years. My focal point in this study was mainly ("only") on the returns generated in the month of May.  

This is to clarify for those people who are not aware of the adage (mentioned above); this period is often used informally in Developed Markets (including the United States, Canada, Japan, the United Kingdom and most European countries) which refers to slack period (low returns) between May and October. - According to a study by Bouman and Jacobsen (2002). 

To my surprise I found that the month of May has actually been positive - on an average returning 1.32%. Out of past 10 years only 3 months have closed in negative territory, rest all of them have been in positive zone. So what does this mean?? As the world is emerging out of the recession, should we think differently this time? 

Again, as some might argue that History can stay as History as present times are different considering the historical context. So, I ask,  if those return are historical, what should be our focus going forward?

I once learned (Behavioral Finance) that, "emotions should not form part of your decision making process" Emotion free investing will help you to form right and GREED FREE strategies. Which, i feel, will assist in crossing the hurdle of the coming sloppy month(s) , if any, and forward.

The problem again, one might face, in the preset context is that markets are looking overbought. Or are they Really Overbought??

Since the market rally, that started somewhere in March of 2009, stocks have rallied northwards without any pause (correction), returning more than 60%, and in some cases (Emerging Countries) more than 75%. This one-way ride is scary, as you might remember the euphoria witnessed in the year 2007/2008, which resulted in the CRASH!!!

This makes the market pundits/experts shout for a correction; which they have been saying for many months….

Following table shows the historical returns. Additionally you can also find below the Fundamental graph of the S&P index showing the current level, the P/E ratio and the P/BV ratio. 

Happy Investing !!!