The stock market has a famous saying of “Sell in May and go away”. Should you be doing it this year?
A look at the KLCI index from 1994 to 2010 shows that there is a 50-50 chance that the market will go down from May to Oct. The performance of the KLCI index is shown in the table below
|Entry Date||Entry Price||Exit Date||Exit Price||% Change|
If you buy into the KLCI on May 2009 and sell on Oct 2009 instead, you would have seen gains of 20.49%. However if you sum up the performance from 1994 to 2010, you will be down 76.74%.
So should you be a buyer this May or seller? Personally, I will not be a buyer as my feel is the index will not see double digit percentage gains and the risk of a correction is high.