View from the Observation Deck

1. The old axiom in the stock market about selling your positions at the close of April and then buying back in at the start of November once made sense from a seasonality standpoint.
2. When the U.S. was more of an industrialized economy it was not uncommon for plants and factories to close for a month or longer in the summer to retool and allow employees to vacation. Closings would obviously be staggered.
3. The theory was that companies would conduct less commerce in that six-month span, which would translate into lower earnings.
4. Today, the world is interconnected like never before thanks to globalization. Outsourcing, a hot-button issue just a few years ago, was appealing to most businesses because of cost and the potential for a 24/7, we never close operation.
5. The three most glaring May-October (2001, 2002 & 2008) periods worth avoiding happened to be in the center of the last two severe bear markets (dot-com bomb & subprime meltdown).
6. The S&P 500 is currently trading 11.4% below its all-time high of 1565.15 on 10/9/07.