Sell in May?

BMO challenges the old “Sell in May and go away” mentality. This and more in the daily roundup.

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  • Experts at BMO put the old adage “Sell in May, and go away” to the test and found that while there’s some truth to it, average investors are better off sticking with the stock market all year long rather than taking a seasonal approach. The bank studied how USD $1,000 invested in the Dow Jones Industrial Average back in the 1900s would have fared if invested only during the months of April to November, switching to non-interest bearing cash for the remainder of the year, and the opposite strategy for the May to October time period. Money invested exclusively from May through October grew to USD $2,167 (excluding dividends) as of October 2012, an annualized price-only gain of 0.7% whereas the November through April portfolio would have grown to USD $122,606 as of April 30, 2012, an annualized 4.3% gain. But here’s the kicker: The same USD $1,000 investment held the Dow year round would have returned an annualized 4.7%. Which begs the question, should we rewrite the old saying? How about, “Come when you may and stay, stay, stay.” Not as catchy huh?
  • Homes became slightly more affordable in B.C. in the first quarter while homes in Ontario became less so, RBC reported Thursday. Nationwide, housing affordability isn’t off the charts but “we’d be humming a very different tune if interest rates were to suddenly rise substantially,” RBC’s Craig Wright said in a release. Fortunately, the bank doesn’t see rates rising until mid-2014 which means Canadian homeowners have ample time to pay down their mortgage faster. For tips on how to crush your mortgage, pick up the June issue of MoneySense.
  • The first wave of American Baby Boomers is retiring quicker than some had expected. More than half (52%) of Boomers born in 1946 now fully retired, U.S.-based MetLife Mature Market Institute has found. The top reason for retiring early was health (32%). Twenty-one per cent of Boomers aged 67 remain employed full-time and 14% are working part-time; of those, most plan to retire fully by age 71, up from 69 in 2011.

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