Friday, June 1, 2012

A Dismal Omen

There is an old stock market adage that an investor should "sell in May and go away." In other words, sell ones shares in May and tuck the money under the mattress, or in a savings or money market account, particularly if a gloomy view of the economy is held. The time to get back into the market is around Labor Day.

It looks like a lot of investors followed that rule, as this CNN Money article reports. The article says the Dow Industrials and NASDAQ had in May their worst month in two years. That means a lot of gloomy investors.

The market predicts what the economy will be doing six months from now. A lot of selling suggests a widely-held dismal view of the economy through November. That isn't good news for the Obama campaign, as they need an economic upturn to boost his chances.