Should you sell stocks in May? If so, where should you put your cash? Liz Ann Sonders of Charles Schwab discusses the pros and cons of trying to avoid short term forces in the stock markets. In the bond markets, we’ve seen a series of “taper tantrums” as investors react to news of further tapering of the Federal Reserve’s bond buying policy. It looks like the dynamics are finally changing, as Jim O’Sullivan explains. Regardless of what the markets are doing, a major question for investors is whether stocks are fairly valued. There is a formula you can use to calculate that, called the Rule of 20.
Schwab Market Perspective: Fighting History?- Sell in May. A common refrain heard this time of year. Historical evidence compiled by Ned Davis Research shows stock market returns in the time period between May and September since 1950 have been far less than those for the time between October and April. Liz Ann Sonders, Chief Investment Officer at Schwab, explains why she continues to believe that stocks will end the year higher thanks to accelerating economic growth. http://www.schwab.com/public/schwab/nn/articles/Market-Perspective?requrl=/public/schwab/resource_center/expert_insight
Bond Markets Are Finally Taking The Fed At Its Word– After months trying to convince markets that tapering doesn’t spell the end of the Fed’s support of the economy, markets are getting the message. We’re finally starting to see an end to the bond market’s “taper tantrums”.
Rule Of 20: How To Tell If The Stock Market Is Fairly Valued– A measure of stock valuations called the Rule of 20 states that the stock market is fairly valued when the sum of the average price-earnings ratio and the rate of inflation is equal to 20. Above that level, stocks begin to get expensive; below it, they’re bargains.
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John R. Day, Bill Ennis, Stephanie Davidson and Matt Heller