By John Stewart, chief investment officer at Farmers Trust Co.

Week in Review: An April for the Record Books

Well, April certainly was a wild ride for the stock market.

President Trump’s tariff announcement on April 2 triggered a sharp decline in the S&P 500, with the index falling more than 11% in just a few days.

At one point, the S&P 500 had fallen nearly 20% below its February record.

After the initial drop, Trump announced a 90-day pause on some of the tariffs, leading to a significant rally – the S&P 500 index closed out the month roughly 15% higher than its April 7th intraday low.

Overall the index was down less than 1% for the month – almost as if nothing even happened.

“Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor.”

That’s a quote by John Bogle, the founder of Vanguard.  I’ve given similar advice many times on Investors Edge and it rings true yet again given the market’s price action in April.

Allowing market volatility or emotions to drive your decision making will nearly always result in poor outcomes.

Just think if you had sold your stock holdings in the early days of April after the markets plunged in response to tariff announcements by the Trump administration.  You’d have missed out on rally in the S&P 500 of close to 15 percent in just a couple of weeks.

In the short-term, markets will confuse and confound investors, but a solid long-term investment plan stands the test of time.

Looking Ahead: Should You Sell in May?

There’s an old market adage that advises investors to “Sell in May, and Go Away.”

But should investors heed this advice?  I’d say not so fast.

May has shown a gain in the S&P 500 index in nine of the past 10 years, with an average return of about 1%.

And even though the May to October period has been the weakest six months of the year for the market going back to 1950, it has still averaged a positive return of nearly 2%, higher roughly 2/3 of the time.

More recently, the May to October time frame has been quite good for stocks.  In the past 10 years, it has averaged a return of 4.6%, higher 80% of the time.