Hi Everyone,

Tax season is behind us and May approaches. In honor of this annual transition,I paid extra close attention to the financial news shows and was amused to see how many of them were reminding investors of the theories around “Sell in May and go away.”

Let’s think about it,

Profit Taking

Gains and Losses

The risks of investing go beyond the initial decision to do so. The fear of losing principal has faded into the fear of losing profits this year.

I hope the following points will shed some light on the issue and aid in your decision on what to do in May.

Unrealized gains may come from a few holdings or may be present across many. The latter should concern you less as it may mean that your original allocation is still in tact.

Prior to taking profits, think about offsetting losses to reduce taxes, the net, loss of future dividends and interest payments. Where will the cash go? Have a plan first.

Income investors should definitely consider using this time to shore up short-term cash needs. I like seeing a year or two of cash on hand for this group.

Growth investors have more to lose by trying to time the market. Not every May goes poorly and knowing when to invest all that cash again has caused angst for many.

Let me know if you want to discuss any of the above in further detail. I’m here to help.

Until next week,
Susan R. Linkous