The catchy finance industry adage of “sell in May and go away” has not been financially rewarding in 2020. The banks are now benefiting from an improvement in sentiment – something almost unimaginable only last month or even last week.
As stated by Burton Malkiel in his book Managing Risk in an Uncertain Era “Investors who wish to play the timing game must possess an unusual degree of prescience about the course of the general economy, corporate profits, interest rates and indeed the entire set of international economic, political, and social developments that affects the securities market. The existence of such omniscience, to say the least, is hard to document”
Rising share prices can increase risk (and viceversa) given constant underlying fundamentals. It is difficult to consistently predict short-term movements in share prices. This is true on the upside (selling into a bull market) and downside (buying into a bear market). Rebalancing is possibly the best strategy to maintain portfolio risk parameters – however, selling into bull markets and buying is bear markets requires a strong stomach.