This article originally appeared in Barron's on April 30, 2023.
This year, the old saw is coming true: Investors would be well-served by selling in May and going away on a nice vacation.
But they should make sure to buy a return ticket. While there’s likely to be unsettled weather this summer, it’s unlikely to be a hurricane, much less the beginning of a new secular bear market. The 40-year bull still has life.
The Oliver Wyman Forum is finishing up a massive research project on the U.S. equity market’s performance since 1871, bringing together economics, history, sociology and finance to explain the market’s ups and downs over the past century and a half. Investors can use those insights to think about the future, both short- and long-term.
The work shows that equity prices are driven by the subtle and ever-changing interaction between corporate profit margins, risk aversion, real risk-free interest rates, and society’s propensity to own financial assets.
Read the full article in Barron's.