April 30, 2019

Through last Friday, the S&P was up 17.3% for the year (and 25% since Christmas), while NASDAQ was up 22.8% for the year (and 31.6% since Christmas), but don’t think about selling today, April 30!

Why do I say this? Because for many years the stock market went to sleep from May to October. About five years ago, pundits loved to show people a chart like this, saying we’re in for flat-to-falling markets.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

If you had followed this advice, you would have missed last summer’s gains and you would have gotten back into the market just in time to suffer December’s terrible market bloodbath. Ouch! Let me hasten to say: Past performance does not indicate future performance. In fact, this chart is VERY misleading.

This chart stops the clock in 2012, so I’d like to tell you what I wrote in 2013 and what happened since then. Six years ago, I wrote the following headline in MarketMail for April 29, 2013: “This Bull Market Has Legs: Don’t ‘Sell in May & Go Away.’”  I guess I got lucky, since the “Sell in May” formula stopped working in 2013. In the last six years, the S&P has gained an average 5.69% from November 1 to April 30, and an average 5.03% from May 1 to October 31 – that’s hardly any meaningful difference.

There are several problems with this “sell in May and Go Away” theory. If you own stocks in a taxable account, you must pay short-term capital gains taxes every year you sell. Even if you have a non-taxable account, the paperwork is still a pain in the neck. Secondly, when do you re-enter? July is usually a great month. Do you nibble a little then? October has been great in recent years (although not last year). Truth to be told, there is no guarantee, so just hold on for the long-term. There is no way of knowing about what stocks will do in the next few months, and the general long-term trend (for 225 year or so) is UPWARD.

Do We Prefer our Constitution (April 30, 1789) or a Socialist May Day (May 1, 1889)?

America’s Presidential history began 230 years ago today, and a Socialist response began a century later:

On Wall Street, 230 years ago today, the first U.S. government was born. On April 30, 1789, George Washington took the oath of office as our first president on the second-floor balcony of what had been New York’s City Hall, on the corner of Wall Street and Broad. Washington’s first words were that he preferred “a retreat which was rendered every day more necessary as well as more dear to me, by the addition of habit to inclination, and of frequent interruptions in my health to the gradual waste committed on it by time,” but he pledged to uphold “the Great Constitutional Charter under which you are assembled and which, in defining your powers, designates the objects to which your attention is to be given.”

A century later, the Centennial celebration of Washington’s inauguration as first president took place from April 29 to May 1, 1889, as various societies held parades and inaugural balls to honor Washington, but such celebrations were soon overtaken by the labor movement and the primacy of “May Day” on May 1.

In France, May 1 was chosen as “International Workers’ Day” on May 1, 1889 – the very day and year that Americans were celebrating the centennial of Washington’s inauguration. Five years later, the May Day Riots began in Cleveland. By the turn of the century, May 1 had driven April 30 from our memories.

To this day, we are re-enacting something like the conflict between George Washington’s defense of our traditional Constitutional limits on April 30 and the May Day socialist fantasies of recently-announced Democratic candidates, who go far beyond the enumerated Constitutional roles of our government in promising Medicare for All, a Green New Deal, Free College (and debt forgiveness) for all, Jobs for All (even for those who won’t work), and (for all I know) Free Vacations to the Destination of Your Dreams.

It’s a grand dilemma: Where is America going — and who will we vote for in 2020? For now, it looks like neither Party wants to abide by the “defining powers” of the Constitution to which they swear allegiance.

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. *All content of “Growth Mail” represents the opinion of Gary Alexander*


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