Sell in May? Never...

Written by Jimmy Mengel
Posted June 28, 2016

“Sell In May and Go Away.”

It is perhaps the most famous investment quote ever, and I'm sure many of you take it as gospel.

Here's why you're wrong...

Now, considering the bloodbath after last week's “Brexit”, I would say that — on paper — it may have been one of the best times to “Sell In May and Go Away.” Since Britain voted to leave the European Union:

  • Global stocks declined more than $3 trillion
  • U.S. stocks lost $830 billion in one day
  • The S&P dropped $657 billion Friday, and fell another 1.8% the following Monday
  • The Dow Jones fell 610 points, and added another 261 points on Monday

That amounts to the largest two-day crash in the U.S. market since last year's historic crash, where the Dow sunk 1,000 points on fears over China's economy.

Investors naturally freaked out and crowded into “safe” government bonds and gold. I don't blame them. These types of crashes are scary as hell.

But they are also typically tied to 'Black Swan' events that the average investor simply cannot prepare for. If you sold your stocks and ran for the bunker every time you felt something like this could happen, you'd never build up any type of portfolio at all. Not to mention the sheer stress of trying to time the market to global events several times a year.

To use yet another tired cliché, a rolling stone gathers no moss. Personally, I insist that my stone gathers as much moss as possible, which is why I design my portfolio to gather and compound another green substance regardless of what the market does.

Money is my moss...

The key to investing is taking the long view, and doubling down on surefire investments when other people are running for the exits — or Brexits in this case.

Here's how to do it...

Before I get into the meat of this, I want to say that I completely applaud the Sell In May phenomenon — in theory. Not only does the stock market typically stay pretty stagnant over the summer, but we all have more free time to reflect on long-term goals and forget the day-to-day stress of managing a stock portfolio.

Just check out the historical data, proving that you can just relax on your stocks over the summer:

sell in may chart

In the last two decades, the S&P averaged around 6% from November to April and had gains 85% of the time. May to October, however, the S&P averages under 1% gains.

It's rather perfect timing, since summer is a time to relax and reflect.

It is a time for vacations, family gatherings, and simply living your life to the fullest. I typically don't check my portfolio unless something terrible happens.

So I'd rather say, “Chill in May and Go Away.”

That being said, if something terrible like the Brexit does happen, I'm happy to jump in and buy up stocks that I already own at a discount. I'm a firm believer in the incredible power of dollar-cost averaging...

You can personally “go away” along with your stocks, and if you own the right stocks you don't have to sell them. You get the best of both worlds: you can ignore the day-to-day grind while taking the time to get your ducks in a row. That's why I'm invested in long-term plays like dividend aristocrats and high-yielding dividend stocks. You'll get paid while the market works itself out.

But the single best way to relax is by investing in a stock that makes money regardless of what the market does.

That's why Warren Buffett said, “We continue to make more money when snoring than when active.”

And I've just found the perfect summer snoring stock. It makes money on every single market transaction, good or bad, and will allow you to lay on the beach without concerning yourself with Black Swans like Brexit or the China collapse.

Here are the details...

You see, in good times and bad, around $170 billion worth of stock is traded on the NYSE each day the markets are open.

The gold market trades roughly $22 billion daily...

More than $400 billion is traded in the bond market...

The foreign exchange market (Forex), where currencies trade, is worth more than $4 trillion a day...

And the largest U.S. options exchange (CBOE) trades millions of contracts daily, with a value in the billions.

But if you don't have a PhD in economics, it's almost impossible to navigate these markets around Black Swan events. In fact, even if you are an expert, it's unbelievably difficult...

That's why I was thrilled to find a way to "hack" some of Wall Street's biggest, most profitable trades and take a "cut" of the money without doing any of the work. You don't need to know much of anything about finance to take advantage of this "hack" and profit from nearly every U.S. financial market with one simple trade.

I'm literally off to the beach myself, and couldn't be any more relaxed about my portfolio thanks to stocks like this.

I'll see you next week, tanned, rejuvenated, and richer than when I left — no matter what happens while I'm not paying attention.


Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. For more on Jimmy, check out his editor's page.

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