SELL IN MAY & GO AWAY (Part 1)

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SELL IN MAY & GO AWAY (Part 1)

talessi@ariesfoundation.org

WASH YOUR HANDS & (please) TOUCH YOUR 401(k)

WASH YOUR HANDS & TOUCH YOUR 401(k)

Around this time last year as all of us were settliong in to the beginnings of the pandemic we were parrying the CDC's catchphrase of "Wash your hands and don't touch your face" by trying to give a little guidance and advice to our clients that they should "Wash their hands and don't touch their 401(k)s". While COVID-19 may not have been something that anyone could have predicted (we'll hold off on any judgements on this front as to whether the US was prepared, or took appropiate measures in the beginning). The market collapse that followed was not a surprise. It had been coming for awhile, and what is still amazing is that it took a global economic shutdown to end the longest & strongest bull run on record.

And then the market did something amazing, it not only got up off the mat, but basically wiped out any losses in a historically quick turnaround and has gone on to soar to new heights. In April it felt like new highs were set on an almost daily basis.

What that all means is that your portfolios, specifically your retirement accounts (if you had listened to us and not touched them last year) have also probably seen major gains. But gains where? Depedning on the allocation strategy in your account some of your holdings may have way out-performed the rest of the investments in your account. And while yes this is good as it means there is more money in your total account, it may not be good from a performace standpoint going forward, because now you have added more risk to your portfolio, whether you meant to or not.

TAKE THE SEASICKNESS OUT OF YOUR ACCOUNT

There are choppy waves ahead in the financial markets. And all that growth that has occured in your portfolio may be weighted to 1 or 2 of your assets, which means they now make up way more of your total allocation then you intended. So what can you do? REBALANCE! Figure out what your original risk strategy was, usually this is what you are doing for ongoing contributions from your paycheck. Example: I have 4 funds that I contribute to every week from my paycheck and the money is distributed equally, so 25% each. Go into your account profile and look at your current asset allocation mix. Does each fund hold 25% of the portfolio? Our guess is probably not. So you need to sell what has done good (this is what we mean by "touching" your 401k) to reduce it back down to 25% and then use the proceeds to buy the other fund(s) that has lagged behind (fund not at 25% per our example). Another way of saying this is "Buy Low & Sell High"

BUT WHEN SHOULD I DO IT?

That's the question. There are 3 KEY INDICATORS to be watching to get a sense of what is to come. What are they and why do they matter? Join us on Thursday, MAY 13th at 6:30 PM as we go over these 3 KEYS and other factors in our latest THIRSTY for knowledge THURSDAY "SELL IN MAY & GO AWAY.

You can sign up here: https://www.ariesfoundation.org/events

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