The S&P 500 on Friday notched a third straight week of gains, and the index has now erased nearly all of its April losses. This week’s advance was driven by an uptick in Federal Reserve interest rate cut expectations, primarily on the back of further evidence that the highly resilient U.S. labor market was cooling down and some dovish actions from European central banks. For the week, the S&P 500 added 1.9%, the Dow rose 2.2%, and the Nasdaq Composite climbed 1.1%.

What happened to “Sell in May and Go Away”? Contrary to the popular saying, staying fully invested has proven to be safer than trying to time the market in any given year. While seasonal patterns do exist and equities could face some increased risk in the summer months, they still tend to go up over the long term despite additional volatility.

Future Wealth’s View

The problem with market highs is that investors think it is not smart to put new money to work at those levels. Of course, a few down days convinces them that that was the right decision. Until, the market recovers and moves on to newer highs. What possible action can that same investor take now? At the beginning of May, the bears were looking in the rearview mirror to predict what could happen. That was a big mistake, as was selling stocks in April. We believe this bull market could move higher throughout the remainder of 2024.

Investing arbitrarily based on emotions and market highs is the worst possible strategy. Without fundamental analysis and research, there is simply no way to get the stock picking right. Even with thorough analysis, there is still a 10-20% probability that there could be an unforeseen event that throws that investment decision into the water. The ability of financial advisors to recognize the shift in the assumptions behind their investments decisions and make the appropriate portfolio changes is what makes them earn their keep. Barring that, one may as well throw darts on a board filled with stock tickers.