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.
Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Southern. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.