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Are you glad you sold in May?

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June 01, 2012 – Comments (26)

I am

26 Comments – Post Your Own

#1) On June 01, 2012 at 2:06 PM, Valyooo (99.63) wrote:

But how do you know when to stop?  Do you sell in every May for the rest of time?

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#2) On June 01, 2012 at 2:15 PM, chk999 (99.98) wrote:

Yup!

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#3) On June 01, 2012 at 4:24 PM, valuemoney (99.99) wrote:

I didn't sell and am fine with it. Tell me the level you think everyone should get back in on the S&P. And tell me what you think the S&P will close at December 31 of this year.

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#4) On June 01, 2012 at 4:40 PM, valuemoney (99.99) wrote:

This is just an exercise to show that your guess is pry as good as anyone elses. We can then calculate how far you are off. Who knows you might be exactly right. I guessed a pullback to 1275 on the S&P on CAPS but did not sell in May in RL. Over half of my money is in BRK.B and it was cheap May 1st so I definately didn't want to sell my shares. Why sell when I am holding something that is very undervalued in my opinion? I got bashed on your last post a little bit but how can I get bashed when I am just stating facts and nothing else. Emotion HURTS investors! Be carefull just because you think something is going happen it might not. Going off numbers is the way to go. Numbers don't lie.

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#5) On June 01, 2012 at 4:49 PM, MoneyWorksforMe (< 20) wrote:

"Be carefull just because you think something is going happen it might not. Going off numbers is the way to go. Numbers don't lie."

Unless they of course are extrapolated into the future; or the numbers are reported by big banks...The past isn't always a predictor of the future...

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#6) On June 01, 2012 at 4:55 PM, valuemoney (99.99) wrote:

O and I know you weren't the one bashing my comment. :)

I was more along the lines agreeing with what rhallbick said. As for your call on selling in May this time, your call so far is good, as long as you answer my two market level ?'s. And tell me when to get back in. On my CAPS I got back in today. I made a market call based on numbers. 1275 or near abouts is a 10% correction on the S&P high of 1416.

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#7) On June 01, 2012 at 5:11 PM, MrPecuniam (< 20) wrote:

Glad I bought more gold in may ;)

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#8) On June 01, 2012 at 6:19 PM, Option1307 (29.90) wrote:

Didn't sell in May (well sold a few positions but not bc it was May) but have a boatload of cash that I've been waiting patiently to put to work the last 6 months. It's not buying time yet, but ever down day brings us closer and closer to another buying spree, my favorite time of year!

 

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#9) On June 01, 2012 at 6:38 PM, chk999 (99.98) wrote:

valuemoney - what do levels on the S&P have to do with anything? Worrying about the levels in advance is like worrying about the sum of digits in a phone number: It imparts no information. Market topping and bottoming action is more about breadth and new highs and new lows. The levels do what they do.

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#10) On June 01, 2012 at 10:01 PM, HarryCarysGhost (99.76) wrote:

HA! I guess I did sell in May without making a corelation to the phrase.

Am in the process of transfering money out of a tradeable account into my long term. Money was just sitting there since Mayday.

Cheers.

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#11) On June 02, 2012 at 3:25 AM, walt373 (99.75) wrote:

I think chk999 has a good point. In the short term, rate of change is much more important than absolute level. The level is important in terms of valuation, but it's a pretty weak effect unless you are at extremes.

Tell me the level you think everyone should get back in on the S&P.

You can't know when you should get back into the market in advance because you don't know what the fundamentals will look like when the market finally reaches your target price. I would just continually reasses the situation. For example, you can't say you should buy Spain if it falls another 30% because Santander and BBVA (which make up 30% of the index) may have gone bankrupt. The level of the market without context is not enough information.

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#12) On June 02, 2012 at 11:37 AM, edwjm (99.87) wrote:

I was gone most of yesterday, so I did not get to interact with the comments to my posts.  I am somewhat surprised by the number of comments my post got.

First let me review:  A month ago I saw many posts on the internet, both here and elsewhere, urging people not to pay attention to the old addage "Sell in May".  I felt this was not the right emphasis for a market that was showing signs of being headed downward, especially in the areas of metals and basic materials.  I even raised the spectre of the smart money wanting the public to stay in while the smart money got out.  I felt I was seeing too much bullishness in a market that was already overbought.  Hence my preceding post.

Generally speaking, calendar bassed investment strategies are not a good idea.  The overall average variations are too small and the standard variations are too large.  But 2012 was the wrong year to rail against selling in May.  Now to comment on the posted comments:

#3, 4, 6 by valuemoney and the response, #9, by chk999: 
Why so much interest in the S&P?  It is a broader index than the Dow (but there are many even broader ones) and therefore will reflect overall movements in the markets, but chk999 is correct in pointing out that worrying about specific levels in it are like worrying about the sum of digits in a phone number.  I have no idea where or when the S&P will set its next major local minimum, so please don't ask me for predictions. Such concerns lie in the area known as "technical analysis" and do not interest me as an investment strategy.  Where will the S&P be on December 31st?  I have no idea.
 
#2 by chk999,  #8 by Option1307,  #10 by HarryCarysGhost
My congratulations for making sound investment decisions!

#1 by Valyooo:
No I do not sell in every May for the rest of time.  See my third paragraph.  Also I do not sell any investment that I consider a "long term" investment.

#4 by valuemoney: 
BRK.B is clearly a long term investment and should not be sold because of short term fluctuations.  I suspect you have been holding much of it for quite some time.

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#13) On June 02, 2012 at 11:39 AM, valuemoney (99.99) wrote:

chk999 ....... Levels of the S&P have EVERYTHING to do with buying or selling. Price Paid is the most important part! If I get a quote of KO and it is trading at 35 dollars instead of 70 I am a buyer. The quote of the market is buying or selling the whole market. I am a new buyer of the market at these prices. I am an INVESTOR NOT a trader. If you are a TRADER I am fine with what you said.

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#14) On June 02, 2012 at 11:50 AM, valuemoney (99.99) wrote:

Way to many people use the word investment or investor too lightly in my opinion.

No I do not sell in every May for the rest of time. See my third paragraph. Also I do not sell any investment that I consider a "long term" investment.

My congratulations for making sound investment decisions!

See all I am saying is I think these are two conflicting sentences. The last should say "My congratulation for making a TRADING decisions." That is all I am argueing. I wanted to state this just because what IBValueinvesting said on the last post. It got me the wrong way a little. I just wanted to show MY side of my thinking.

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#15) On June 02, 2012 at 11:53 AM, valuemoney (99.99) wrote:

And I know edwjm gets my point from this statement.

#4 by valuemoney:
BRK.B is clearly a long term investment and should not be sold because of short term fluctuations. I suspect you have been holding much of it for quite some time.

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#16) On June 02, 2012 at 11:54 AM, valuemoney (99.99) wrote:

Good call on selling in May though.

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#17) On June 02, 2012 at 12:17 PM, edwjm (99.87) wrote:

valuemoney: If after you hypothetically bought your KO at $35 the price went up over the next several months to $140 for no visible reason, wouldn't you at the very least consider selling some of it?  To be called an investment decision, must it necessarily be "forever"?

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#18) On June 02, 2012 at 12:45 PM, Valyooo (99.63) wrote:

Yeah I agree with edwjm on that.  if you think you can sell and buy back for a lower price, you should.  even buffett has done that.

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#19) On June 05, 2012 at 4:55 PM, valuemoney (99.99) wrote:

Edwjm: It depends. That is why levels are so important. This is exactly what I am getting at. The market had went up in the months leading to MAY but the yeild the S&P was yielding was not enough for me to sell. Sure if the yield went down to under 6% I would consider selling the market. But that level on the S&P would be 1616 on last years earnings. If the market was trading at that level I wouldn't even comment on selling. It pry wouldn't be that bad of an idea. See if KO went up to $140 I would sell for sure. $3.69 was KO earnings last year. 140 divided by 3.69 is a PE of 37.94  hence a earnings yield of only 2.64%. I can look else were for a higher earnings yield. This is how I always look at investments. You have too. I also know you have to consider future earnings because that is HALF the equation of PE. Market levels and indiviual stock quotes are basically the same thing. Stocks make up the market. That is y it is so important you have to answer the ?s about what you think the market will be trading at. It don't make sense to me to sell on feeling. Price and earnings should be your main factors. When you gave your example it was VERY easy for me to make a decision to sell or hold that investment. I wouldnt sell some of it....I would sell ALL of it.

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#20) On June 05, 2012 at 5:07 PM, valuemoney (99.99) wrote:

Plus none of it had to do with what month is was, what Europe was doing, what president was being elected, is there going to be QE3, if the market has went up for 10 straight months, ect. All this stuff is noise. Filter out the noise and use numbers. Be care with the numbers you use. Especially when considering future earnings. My stance is bullish because of housing and current housing numbers. House construction will double in the next 3 years from current levels. When this happens there will be a snowball effect. Earnings will go up because of it. Current tax rates will go up causing a drag. Plus rising interest rates. That will also cause a drag. But net, net I am betting earnings will be higher than $97 on the S&P in 3 years. Thats why I am a net buyer. Another big factor is 10 year on US ten year is under 2%. When the S&P is yielding 5% MORE than the 10 year I will always be a buyer.

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#21) On June 05, 2012 at 5:25 PM, valuemoney (99.99) wrote:

What I am doing on CAPS is way different. I am a trader on CAPS. Look at my moves. I have to gain on the leaders. Most red thumb everything bearish which I believe will garner the most points long term. Now I have to gain ground. So I look at charts and what not. In a way you were DEAD ON in your sell in May. I accually totally agreed with that on a TRADING standpoint. But I had to comment different when it comes to investing. I then waited for a 10% correction and then red thumbed bearish picks again. I figured that would help me gain 1000 Caps points on the top 100 fools.  chk999 does the same thing in my thinking but picks up more buy green thumbing bearish picks. His timing is pretty good but I would say he stays bearish TOO LONG. Look at the last time he did this. It was last year right before last years correction. But on some on the picks he got hurt pretty bad. These are MY THOUGHTS. I do not know what his thinking is. He is an excellent trader on CAPS in my oppinion. I follow his actions pretty closely. I just use a little different stradegy. 

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#22) On June 05, 2012 at 5:43 PM, valuemoney (99.99) wrote:

I try to time the market but I also look at what the top 20 players are doing an try to time them. bbmaven and AsimovRobot have the best stradegy but can be caught by me I think. Babo is pretty much just cruzing at a slow pace. bbmaven will catch him with current stradegies in my oppinion. As the market goes up I accually like my chances better. I opened a new profile valuemoneygreen to reflect what companies I like RL. I like many more I have on that watchlist but am waiting to add them. I plan to open those picks and keep them open forever unless they get mispriced badly compared to the market. It is a boring list. The profile will never get in the top 100 but the names I pick are companies I like at a fair price compared to the market.

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#23) On June 05, 2012 at 5:57 PM, umh (< 20) wrote:

I didn't sell because it was May. I did sell in May because I had reason to believe that prices would be lower in the future; this time I was right. There is timing the market and reading tea leaves; I would rather read people. Timing the market implies some definite knowledge while timing people is a percentage deal. If buy and hold was a panacea then Woolworth's would still be in the DJIA.

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#24) On June 06, 2012 at 10:50 AM, edwjm (99.87) wrote:

Things are looking better in June, not because it is June, but because stocks are more reasonably priced after their recent decline.  Now would be a good time to put SOME money in good companies paying over 1% in dividends that are reasonably priced.  I don't recommend going "all in" all at once.  As for chasing high beta risky stocks hoping to make a killing with a quick turnover, not a good idea!   The speculators that piled into FB at $27.76 yesterday probably don't think that was such a good idea today.

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#25) On June 06, 2012 at 11:14 AM, edwjm (99.87) wrote:

valuemoney: 

I must say that I think some of our prior disagreements were more a matter of semantics than anything else, particularly with respect to the definition of the word "invest" and its derivatives.

The comment about speculators buying FB at yesterday's high was refering to day traders.

I too play the ETF's on CAPS to improve my rank.  CAPS is a game and games must be played by the rules of the game.  I wish the rules didn't favor strategies I would never use in real life, but they do.

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#26) On June 06, 2012 at 11:20 AM, valuemoney (99.99) wrote:

Agreed.

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