Many investors follow the popular "Sell in May" seasonal strategy, selling stocks at the end of April with the expectation of buying them back at the beginning of November. But after May's strong performance, investors who followed that strategy are feeling they missed out and that the strategy is therefore worthless.
In the following video, Fool contributor Dan Caplinger notes that the "Sell in May" strategy isn't just about a single month but rather covering a six-month span in which the worst losses historically haven't usually occurred during May. If you're going to follow the strategy, as Dan sees it, you have to give it a fair chance to working. Dan notes, though, that a better approach is to look closely at the fundamental reasons why stocks might do badly this summer and choose sectors that are most likely to drop as targets for trimming your holdings.
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.