Sell in May and Go Away

Great article by Mark Hulbert on the "Sell in May and Go Away" saying. It is true that stocks perform worse in the summer and better in the winter. In the article he looks into the question of whether there is another asset class that performs better in summer and worse in winter. He finds that the Lehman US Bond Index does perform better in summer than winter. Therefore, an optimal strategy is to sell stocks and buy bonds for the summer. Of course this is just a statistical average over the long term and won't work every year. At the moment, though, I am net short stocks (including put options as shorts) and long bonds, which is a more extreme version of this strategy. I'm also 60% or so at least exposed to the Australian Dollar and only 20% to the US Dollar which is falling. In computing the latter I look at a firm's primary listing - for example, News Corp is a US Dollar asset even though I trade it in Australia. I'm now up to 2% allocated to gold (in my Roth IRA through GLD). Recent trades including buying TLT calls (today that doesn't look like such a great idea!) and this morning Yahoo puts. Yahoo's earnings report yesterday met expectations. So why the huge ramp in price? This is the kind of trade I do on news occasionally. When Fortune decides that finally it is time to get back into net stocks, it may actually be time to get out (or past time). This month the main news in my portfolio has been the rise in the Australian Dollar - each 1 US cent move up adds about $US3700 to my net worth.