May 2003 Monthly and YTD Results

YTD is even better:

I'm tempted as usual to sell to lock in some great gains YTD, but this market timing business usually leads to under performance in the long run.

I have been selling SOME just to keep my asset allocation where I want it.

Lets say you have a $1M portfolio allocated 75:25 (75% in equities and 25% in fixed income like bonds.) If the market makes the portfolio go up 10% overall due to equities going up, then you can sell 25% of that $100K gain just to keep your allocation at 75:25! If the market goes down, then you just buy it back which gives you automatic buy low and sell high effects for enhanced returns!

Here is the article at Schwab about the myth of seasonal investing Market Folklore Under the Microscope: Does 'Seasonal Investing' Really Work?

and a new table since that article updated through 3/3/03:

I wonder if we might actually regress to the mean this year and have better than average performance during this "seasonal time" since the seasonal effect has worked pretty well the last 10 or so years? Regression to the mean would have the effect go the opposite way. This is something to consider if you are tempted to try and time the market.

Consider how good May 2003 has been and look at the table and see what was "typical" for May...

More Reading

I consider these articles must reads:

1. Asset Allocation and Diversification
2. Using Asset Allocation to make money in a Flat Market
3. Asset Allocation Review shows how asset allocation smoothes portfolio returns.

Suite University

Learn more about investing and other subjects by taking one of our courses.

Suite University
Investing101
Starting your own Small Business
Growing Your Own Small Business

DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.