Google informs me that the advice to "sell in May, and go away" comes from the tradition of British merchant bankers—I presume in the 19th century—to leave London for the country side in May and come back on St Leger's Day in September. I am partial to a good anecdote, but does it work? In order to check, I ran a little study using the S&P 500 going back to 1991. The first chart below shows the returns you would have foregone by selling in May and waiting 35 weeks and 17 weeks, respectively, before buying back. I have included both mean and median returns, because the outliers can skew the former when your sample size is not large. The second chart shows the results of a strategy which shorts the S&P 500 in May, buys the first week of October, and holds until year end.
Read MoreInvestors have found it difficult to resist the temptation to become armchair generals in response to the recent flurry of geopolitical volatility. I have some sympathy for that. Political experts told us that Mr. Trump would mark the beginning of a new U.S. isolationism, and even speculated about the emergence of a new Monroe doctrine. The president's "America First" discourse, the statement that NATO is obsolete, and the rapprochement to Russia were all pivots watched ominously by other world leaders, especially in continental Europe.
This story, however, increasingly feels like ancient history.
Read MoreThe bad news is that investors once again has to play armchair generals in the next few sessions as they try to gauge the importance of the Mr. Trump's sudden decision to put his foot down in Syria. There are no easy way to break this to investors. There is a lot stuff going on and even more well-minded "experts" who are ready to tell you what to do about it. The good news is that I am going to spare you my hot takes on this occasion, because I am going on holiday. My destination is Madrid, so please do look me up if you want a cerveza. I can most likely be found in one of El Prado's majestic halls. Assuming you lot haven't started a nuclear war and blown me to smithereens, I hope to be back next weekend with some more market-related meat and potatoes.
Read MoreThe first quarter was a pleasant one for investors. It was difficult not to make money on the long side in equities, while it remained slim pickings for bears. Bonds and credit rallied too, albeit less vigorously, and commodities also pushed ahead. The USD-bull story, however, fell by the wayside. My two first charts put some numbers to this. The first shows the total return-to-date for the main asset classes, and the second adjusts for volatility. Equities did the heavy lifting—with EM on top and Japan trailing—but the 8.2% jump in gold is also interesting. Not many have really talked about this, but it has benefited the portfolio in an environment where its core equity positions has been left behind by roaring benchmark indices. High yield credit in the U.S. has also pushed higher without much ado, while commodities have trailed. U.S. govvies have underperformed although, the 10-year bond reasserted itself towards the end of the quarter. Finally, king dollar was demoted to Jester.
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