There is an old saying on Wall Street: "Sell in May and go away."
The translation: Company earnings and profit outlooks are talked about early in the year. Economic indicators for past quarters are analyzed and portfolio managers invest accordingly. By the spring, investors want to capture profits or take losses before the long slower seasonal trading in the summer months.
But this year just might be different.
World stock markets are changing. Markets are shifting. New tech is moving aside for older, revised and revamped industries. There is a fundamental change going on.
Even Apple (APPL), the world's largest company, suffered its first revenue decline in 13 years. Oil prices have basically stabilized, as have most other commodities. U.S.-based manufacturers are streamlining operations, modernizing factories and innovating.
A strong manufacturing base yields earnings over the long haul, many experts suggest. The basic industries of America — energy, metals, mining and now even solar — are on the up cycle.
Matt Tuttle, chief executive officer of TuttleTactical, looks at the prospects this way: "We like energy, the metals and mining stocks. We like solar stocks, real interesting. And, what we don't like: We don't like biotechs, we don't like technology. Those are the main sectors we are looking at."
Fed and election impact
The dollar is languishing following the Federal Reserve's decision to stand pat on short-term rates (0.5 percent). And there is a general feeling in the marketplace that the Fed will not raise rates until after the presidential election.
"I think the Fed is going to sit on its hands,” Tuttle said. “I don't think Janet Yellen wants to be the person responsible for electing the next president."
The perception is that, traditionally, election years have been good for markets. While the market never goes straight up and summer can be a difficult time, overall, markets have gone higher in time for Election Day.
This year, investor sentiment has turned to commodity and basic material stocks, as the growth stock sector has weakened.
All indicators point to a move from a high-tech economy back to the basic materials sector — the old reliables like oil, steel, aluminum and heavy machinery. Just in the past month, as the high-flying techs have been hit, the materials sector was up 10 percent.
Jared Dillian, a Wall Street trader, told VOA, "materials have rallied a lot. But talk about being underinvested — I mean, global asset managers around the world are totally underinvested in materials because it hasn't worked in five years. It was, in fact, 2011 when investors moved away from the materials sector, toward growth tech style.”
If Dillian and market reports are accurate, materials are back in vogue with investors.
The complaints by U.S. presidential candidates about the death of manufacturing in the U.S. does not reflect reality.
In actuality, U.S.-based manufacturers are streamlining operations, modernizing factories and innovating.
A strong manufacturing base yields earnings over the long haul, many experts suggest. And that goes back to materials.
The basic industries of America are on the up cycle.
"Basic materials are next up in the natural sector rotations that markets cyclically go through, and investors are gravitating toward these stocks," said analyst Jim Cramer of CNBC.
A stabilization in commodity and basic material prices, a perception that perhaps technology is at a plateau, and a contentious election campaign are all contributing to a fresh look at what to sell in May, what to invest, and not go away.