Runaway May

"Sell in May and Walk away" should be changed to "run away".  If tomorrow's stock market follows the Asian markets tonight, it will be a final  Mayday of stock market pain.  May is down over 6% and has given up half of the 12% year to date gain that everyone was cheering about at the end of March.

Managing your emotions in investing is the single most important factor in investment success.  Knowing yourself and your internal chemical reactions to risk and returns can provide a discipline to act methodically and rationally.   For example, yesterday the market was up 1.1% and today it was down 1.4% - yet there was no major change in news (political, international, financial, etc.). 

Even though I know intellectually that you can't time the market, emotionally I have attempted market timing many times (including this latest movement to cash).  But I have always said "the stock market continuously reminds you of your suboptimal performance". 

The best strategy is to establish an asset allocation that corresponds to your risk profile.  Your risk profile is correct when you can ignore the market news and on any large unrealized loss you can sleep properly.  Re balance every year or so back to your original asset allocation and continue to forget about the short term.   This "passive" investment style will give you overall a great long term performance and beat over half of the money managers.

So what's the most worrisome month to invest?

"October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February." -- Mark Twain