Well, “sell in May and go away” didn’t hold true. Even with Friday’s decline, most held up well. It doesn’t mean the summer will be easy or difficult. I’m not sure it means much at all. Let’s look at a couple of things.
The New York Times Business section ran the following June 1, 2013. Written by Floyd Norris.
“Margin debt in the United States –money borrowed against securities in brokerage accounts –has risen to its highest level ever, at $384 billion, surpassing the previous peak of $381 billion set in July 2007 (Bloomberg 5/2013). Historically, rising levels of margin debt have been seen as a sign of speculation.
Relative to the size of the economy, margin debt is far from setting a record, but it has climbed to levels seen only twice before during the past half century. In each previous case the increase came during bull markets that ended with rapid falls in share price.”
Importance of a Plan
The margin debt stats seem to indicate optimism or an eagerness to acquire investments. Much of the economic data is fairly positive as some growth exists. Rather than worrying about the accurateness of these trends and rather than expecting history to repeat itself, follow your plan.
Let me know if you’ve lost sight of or need to revise the plan.
Until next week,
Susan R. Linkous
The text above reflects my opinion. Investing always involves risks and losses can occur even when you have a plan.
Quote of the Week: “A market is the combined behavior of thousands of people responding to information, misinformation and whim.” ~Kenneth Chang