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Depending on how you see things, Trouble or Opportunity could be lurking

A look around the corner

As the adage of sell in May goes, there is some data that shows the months of August and September could see markets slide a bit. Although history tends to repeat itself, there's isn't compelling evidence that you should liquidate half or all of your investments just before these months.

So what happens in the months of August and September? Kids are back to school, summer is over, traveling slows and it's back to business for the adults. This also marks the tail end of the third quarter and the beginning of Q4. Corporate earnings give a clearer picture of how companies and stocks should perform throughout the remainder of the year. So, let's take a look at a chart from LPL research to get a feel for what might be to come.

There's no denying the charts do have good evidence that the upcoming months could take a slight dip; especially in the post-election years. So here's how we are addressing this setup and the potential for a 5 - 10% dip.

  • Review of the current holdings

  • Take inventory of the market as a whole and momentum

  • Factor in any potential tax law changes

  • Consider earnings and sector-specific concerns

  • Avoid major cash raises

  • Adjust and make minor tweaks to ensure positioning

In a similar fashion to the way we stood up to the summer sell-off headline, we believe there is still room for the market gains to continue. There are some areas of the market that remain overvalued and we have been enjoying those gains, but it will be a time to consider taking more profits. Not to get specific on a segment of the market that looks attractive, but don't be surprised to see additional exposure into more value stock exposure. They pay dividends, have less volatility, and are much, much cheaper than some of the red hot growth stocks.

Again, this should come as no surprise to you that we're taking a careful approach to rebalancing or tweaking of our inventory. Attempting to shift and chase areas of the market that have performed well in the past doesn't guarantee that it will continue. We conduct the research, listen to earnings calls, review the company reports and make sense of it all. With all that data, we integrate into our systems and make decisions that we think will prove beneficial for our clients.

We view this as an opportunity; not pain. It's a time to adjust, make changes and look forward to seeing how those changes play into your portfolio performance. The other part of the chart does show quite a bit of promise as we near the end of the year. Again, one could look at the near-term pessimism and worry about looming fears of the delta variant and an expensive market that may be running out of steam. At this point in time, we don't believe the pessimistic view is the way to position yourself or your portfolio.

And that's only the beginning...Reach out and schedule a consultation to discuss your situation. We'll walk you through your options and help you make the right choice for your goals.

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