Is it time to ‘sell in May and go away’? Some superstitious investors think it is.
The idea is that people sell their shares for the summer and don’t look at the market again until September or November. A holiday from May until November sure sounds like a nice long one!
Is The ASX 200 About To Crash?
You can see that the saying might have been relevant many decades ago, but I’m not sure how applicable it is to today’s investment world.
However, I think it is worth considering whether a crash is coming. The ASX index is almost at its decade-high.
Reaching a new high doesn’t mean a crash is closer, but the fact it’s been 10 years since the last market crash suggests another one is getting close. History suggests a recession happens every 10 years.
The ASX closely follows the performance of the US market day to day, so any downward movements of the S&P 500 (iShares S&P 500 ETF (ASX: IVV)) will also hit the ASX. The US market can’t keep going up forever, particular as the effects of President Trump’s sugar hit of stimulus wears off.
Many investors are cautious about what effects the falling Australian house prices are going to do to cyclical businesses like banks, retailers and travel businesses.
Flight Centre Travel Group Ltd (ASX: FLT) has reported that Australian leisure earnings are going backwards and Westpac Banking Corp (ASX: WBC) has said that its cash earnings fell 5% even after excluding the remediation & restructuring costs in today’s result.
Another thing to worry about is the ongoing trade battle between the US and China, with President Trump threatening even more tariffs on China. Australia relies on China for a lot of economic activity. I’m not just talking about the iron China buys from BHP Group Ltd (ASX: BHP), think of businesses like Blackmores Limited (ASX: BKL) and Treasury Wine Estates Ltd (ASX: TWE).
There is a chance that the ASX may crash, but that doesn’t mean you panic and sell everything you own. The share market has returned an average of 10% per annum including all of the crashes over the years.
I would just be particular about the shares you decide to purchase today, we have many different opportunities available to us. Instead of an ASX ETF, I would much rather buy one of the reliable and proven ASX shares in the free report below.
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