CMW MONTHLY MONEY PULSE™

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May 31, 2019
CMW MONTHLY MONEY PULSE™

Well, the time for this month’s money pulse couldn’t have been more perfect.   What a roller coaster we have been on this month.  Have you heard the old adage “Sell in May and go away”?  It’s a term we come across frequently this time of the year, as May has a reputation for not being the best month for investors.  Out of the last 19 years, 13 of those Mays saw pullbacks.  This year was the worst May in 7 years.

So, are we saying you should “sell in May and go away”? Absolutely not! But let’s entertain that idea for a moment.  When would you sell? April 30th? May 1st?  In 5 out of the last 19 years, there was a pullback either 2 weeks before or after May.  And on the other side, when do you jump back into the market?  Does anyone have a crystal ball we can borrow? (We have one but it’s a bit smudged.) The problem with this strategy is illustrated beautifully in the chart below. This is why we strongly believe in ALL Markets ALL the time!

Ok, so enough with old adages. What made this “The worst May in 7 years”?  The markets are saturated in uncertainty!  The main source of discomfort in the market has been the trade dispute with China.  Both sides have dug their heels in and this has an impact on both investor and business sentiment.  Reports from China indicate manufacturing has begun to slow, which doesn’t surprise us given the above factors.  Brexit concerns are arising again with worries of a looming European crisis. Throw in a pinch of (slightly) inverted yield curve, top this with a dash of tariff threats to Mexico and we have a perfect recipe for FEAR in the market.

All these concerns are very real, but let us quell this with the repeated quote from one of the great all time investors, Sir John Templeton. “Bull Markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”  Market sentiment seems pretty skeptical right now and certainly far from optimism. What do you think?

We believe this bull still has room to run.  In spite of these sentiments, the U.S. is currently experiencing a “Goldilocks economy,” meaning, GDP is up and expected to remain between 2-3%, unemployment is forecasted to continue at a natural rate and inflation remains quite tame.

Even with skepticism and volatility in May, all assets classes remain positive YTD.  A recent reader of last month’s Money Pulse mentioned how he loved our analogy of a globally diversified portfolio to an organic garden.  Currently, our garden is still thriving.  All the plants are alive and green, a few may be slightly wilted from volatility but, overall, we are not worried about the long-term viability of the garden and (in their season) all the plants.

Have a great weekend!

Indexes are listed in respective order to their reference above: DJ Industrial Average TR USD, S&P 500 TR, DJ US TSM Large Cap Growth TR USD, NASDAQ 100, Technology NTTR TR USD, DJ US Health Care TR USD, DJ US TSM Large Cap Value TR USD, DJ US TSM Mid Cap Growth TR USD, DJ US TSM Mid Cap Value TR USD, DJ US TSM Small Cap Growth TR USD, DJ US TSM Small Cap Value TR USD, FTSE NAREIT All Equity REITs TR, DJ Gbl Ex US Select REIT TR USD, Bloomberg Commodity TR USD, MSCI EAFE NR USD, MSCI EAFE Growth NR USD, MSCI EAFE Value NR USD, MSCI EAFE Small Cap NR USD, MSCI EM NR USD, BBgBarc US Corporate High Yield TR USD, FTSE WGBI NonUSD USD, JPM EMBI Plus TR USD, BBgBarc US Govt 1-3 Yr TR USD, ICE BoafAML 1-3Y US Corp TR USD, BBgBarc Intermediate Treasury TR USD, BBgBarc Interm Corp TR, BBgBarc US Treasury US TIPS TR USD. These materials have been prepared solely for informational purposes based upon data generally available to the public from sources believed to be reliable. All performance references are to benchmark indexes. Performance of specific funds will vary from respective benchmarks. Past performance is not an assurance of future results. Each index cited is provided to illustrate market trends for various asset classes. It is not possible to invest directly in an index.