“Sell In May And Go Away”

AI generated image in the style of a Danish landscape painter.

“The exact provenance of the saying ‘Sell in May and go way, don’t come back until St Leger’s Day’ is unclear but a consensus has formed around the idea that it emerged due to stock market traders in the City of London observing a seasonal slowdown in activity during the summer months.”

With the above paragraph in mind I thought it useful to explain to readers how I am handling the different investing models over the summer and into the fall.  The investing models vary from the Schrodinger to the Franklin.  Let me summarize my thinking even though the details are contained in the various portfolio reviews.  There are times when it makes sense to place the ideas on one page.

1.  Robo Advisor or Computer Managed Portfolio (Schrodinger).
   1. No changes are planned for the Schrodinger as it is completely managed by computers at Schwab.  I may ask the owner to slow down contributions until after the election as that is a huge unknown in the U.S.  Markets don’t like unusual levels of uncertainty.
2. A second investing model is the “All U.S. Equity Portfolio” or the Copernicus.  Investments focus on using VTI, VOO, SPY, and ESGV.  As frequently stated, interested followers of this model could easily reduce the choices to VTI and VOO.
   1. Once more, I may request or ask the owner to temper new cash additions unless the market dips over the summer.  The stated goal of the Copernicus is to outperform the S&P 500 (SPY) so it makes sense to purchase more shares of the market (VOO in particular) when the market sags.  That could well happen this summer.  Of course one needs cash to invest.
3. A third investing model is the Asset Allocation Model (Huygens and Pauling).
   1. The plan is to keep the asset classes in balance or within plus or minus 0.5% of the recommended percentages.  Since both portfolios are new it may take a few months before the asset classes are in balance.  New money will be allocated to the asset classes most out of balance and also recommended as a Buy based on recommendations that show up in the Kipling spreadsheet.  For more details, follow the reviews of the Huygens and Pauling.
4. The fourth investing model is known as the Sector BPI model.  The remaining portfolios use this approach to investing.  A few of the portfolios are:  Gauss, Einstein, Kepler, McClintock, Carson, Millikan, and Franklin.
   1. I’ll continue to follow the rules laid out for investing in sectors when they are oversold and setting Trailing Stop Loss Orders (TSLOs) when sectors are deemed to be overbought.  The sector investing rules are laid out elsewhere in this blog.
   2. In addition, and this is one of the main reasons for writing this blog, I have been setting TSLOs under VTI and VOO when they are part of the portfolio.  These TSLOs are designed to protect capital should there be a major selloff during the dog days of summer.  I plan to continue setting TSLOs for these two equities until the 2024 election results are known and there is some assurance violence will not break out.

That sums up the four investing models and how I plan to work with each model over the remainder of the year.  The next eight months could be quite rocky so lay out a plan as to how you intend to handle the situation.  In some cases I will be doing little to nothing different.  In other cases I am taking a cautious approach to investing.

Questions and comments are always welcome so chime in.