Sell in May-this time is different
Sell in May…? Once again, we had the usual “this time is different” arguments at the time. Back in May (3 months ago), people couldn’t think clearly, as QE2 was giving Investors a blurry picture. Many were talking of the resilient Economy, and “this time IS different”. But, boy, were they wrong. It is NEVER different. From ING research back in May;
Last year, this constellation led to a soft patch in global growth and a difficult period for risky assets. So the big question now is whether or not investors should again follow the adage “Sell in May and go away, but remember to come back in September”. In our view, the answer would be that “this time is different”.
The crucial difference today is that we are further advanced in the economic cycle because of which the economy is more resilient. Global economic activity gauges (especially for the services sector) and labour market indicators (especially in the US and Germany) stand significantly higher than a year ago. Partly due to this, risky assets have performed remarkably well in view of the shocks that recently hit the economy (oil price, Japan, sovereign debt stress). The fundamental force behind all this is the fact that the corporate sector is in a more expansionary mood than a year ago as evidenced by its hiring and investment intentions.
And here is the answer. Maybe it is time to pick up some? Below DAX index.