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Sell in May and Walk Away !

Looks like old wall-street saying about "Sell in May and Walk Away" could be more applicable this year considering following factors:
  • Markets have seen best rally in 7 decades with all major indexes up by over 70% in one year
  • Major indexes have crossed key psychological levels of DOW 11000, S&P 1200 and Nasdaq 2500. Many investors must have kept these as key levels where they were thinking of selling
  • Financials could be in trouble again with all the "sins" catching up with them - Goldman Sachs fraud case could be first of many to come. This could shatter confidence once again in wall-street and banks
  • While corporate earnings till now have been excellent, economy is still in delicate stage. It is possible that these earnings could be one-two quarter phenomenon before comparisons with 2H2009 would start kicking in
  • Unemployment still over 9.5%
SEC case against Goldman Sachs was interesting in many ways - but most importantly it highlighted that regulators have finally woken up from their hibernation of 8 years during Bush administration. This case would surely add lot of momentum to Obama's financial reforms and that would be good for America in long-run.

So how does one invest in these times - it's best to stay with "Sell in May and Walk Away" rule of wall-street and stay on sidelines for next few weeks. Keep lot of dry-powder (aka cash in hand) in case DOW comes below 10500 !

Have a great week !

/Shyam

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