Seasonality tendencies are about to go negative

The end of the market’s best six months is fast approaching — also known as “Sell in May.” Mid-term election years intensify this effect. So weakness in the next 6 months wouldn’t be at all surprising.

Things are still a bit frothy and many of my watch list stocks are becoming less and less attractive for new purchases.

Between not being able to find much that is cheap enough to buy and the weak seasonality, I’m updating my watch list and holding some cash so I can take advantage of any opportunities that may come my way in the next few months.

Longer Term Things Still Look Good

Jeff Saut thinks we are in a secular bull market. If so, pullbacks are for buying.

Bob Shiller thinks the odds of a recession any time soon are very low. Recessions usually end bull markets. Score one for the bulls.

What If We Have a Bear Market?

What happens if we have a bear market? It’s usually better to wait it out, according to Sam Stovall.

Always Be Mindful of Risk

This chart shows the percentage gains needed to recover from losses of different magnitudes.

Don’t confuse activity with productivity

So there are risks. Nothing is automatic and easy. But if you can find some fairly-priced great company and buy it and sit, that tends to work out very, very well indeed especially for an individual. — Charlie Munger

Patience is the individual investor’s greatest advantage over the market.
— Todd Wenning