There’s an old saying about sell in May and go away that highlights the historical underperformance of the stock market during the summer months compared to the generally better performance during the other half of the year. If investors use the sell and May and go away strategy, they would sell their stock portfolio in May, and reinvest everything again in the fall. Some people find this strategy more rewarding than staying in the market throughout the entire year.
This old adage does have some historical evidence backing it up. And it’s certainly relevant today if this year is any indication. Most stocks in my portfolio fell in May, as did other people. U.S. stocks were hit the hardest. It was the worst May since 2010. Even my European index fund dropped a few percentage points.
The beginning of a correction?
It’s hard to say if the stock market will continue to slide further going forward. But I don’t believe selling shares is a good strategy right now. Instead I continue to believe that a basket of medium term bonds can help provide stability in a portfolio when the stock market has no clear trend. The BMO bond fund I wrote about last month is one example of this simple approach. It climbed in value during May when most stock funds experienced a loss. If the equity market continues to fall throughout the summer, at least I’ll have some bonds to help counteract that negative impact. 🙂
Another winning asset class last month was cryptocurrency. 🙂 Bitcoin’s value jumped 50% to roughly $8,500 US per coin. I sold all of mine a couple of years ago but this is great news for anyone who still holds BTC or altcoins.
Although my investment portfolio took a net loss last month, I received a lot of extra income. I collected $5,300 in rent. I also received about $4,000 from the government. This is because last year I worked 5 different jobs. Each one had deducted too much payroll and income tax from my paycheques because they all assumed I was only working for them, and that I was going to be employed year round. Well I’m no longer working at 3 of those jobs anymore so that’s why I was owed some tax credits. 🙂
Overall my net worth remained pretty much unchanged from the previous month.
Liquid’s Financial Update
*Side Incomes: = $7,900
- Part time job =$700
- Freelance = $300
- Dividends =$800
- Interest = $800
- Farm rent = $5300
*Discretionary Spending: = $2,400
- Food = $400
- Miscellaneous = $700
- Interest expense = $1300
*Net Worth: (ΔMoM)
- Total Assets: = $1,335,200 (-18,000)
- Cash = $2,600 (-8800)
- Canadian stocks = $171,100 (-3900)
- U.S. stocks = $125,400 (-6400)
- U.K. stocks = $21,800 (-700)
- Retirement = $131,300 (+1000)
- Mortgage Funds = $35,900 (+500)
- P2P Lending = $35,100 (+300)
- Home = $367,000 (assessed land value)
- Farms = $445,000
- Total Debts: = $392,400 (-17,900)
- Mortgage = $188,000 (-400)
- Farm Loans = $165,700 (-12500)
- Margin Loans = $38,700 (-5000)
*Total Net Worth = $942,800 (-$100)
All numbers are in $CDN at 0.74/USD
I was able to renew my farm loan in May. But the interest rate went up and the best I could get was 5.04%, which is a bit higher than I expected. So I decided to make a lump sum payment of $12,000 towards the balance. I also paid down some margin debt in anticipation of a potential major stock market correction. Luckily I had enough savings in my bank account to pay down these debts thanks to the abundance of income that I received during the month.
If investments don’t go down once in awhile there wouldn’t be opportunities to buy on the dips. 🙂 But hopefully things will be better in June.
Random Useless Fact:
According to HuffPost, men and women generally have different types of dreams.
Men’s dreams tend to consist of:
Strangers, success or failure
Sex with unknown partners
Cars and roads
Women’s dreams tend to consist of:
Family members, relationships
Kissing, flirting with someone, or sex with someone known to the woman
Loss of loved ones