Cycle and Seasonal Effects
Despite a few bumps at the end of the month, May ended on a solid note for many asset classes. Equity markets soared to new highs, led by the major US indices; the S&P500 and Nasdaq100. Chinese equities, which have long been forgotten by the current bull market, look as if they are finally waking up. Commodities, most of which came under severe pressure in 2023, are not to be missed, and are experiencing a major rebound this year. Fixed Income markets, still disappointing this year, are nonetheless enjoying a slight upturn as long-term rates stabilise. So “sell in May and go away”? Although tempting on paper, this strategy rarely paid off, as it involves getting both exit and reinvestment timing right. As often reminded, missing one or more of the year's best sessions is particularly detrimental to compound performance over the long term. Also in a world of rising inflationary pressures, it is worth considering that equities and commodities remain the most effective long-term “weapons” to shelter returns from inflation, provided good diversification and picking strategies within these asset classes. We are detailing these ideas in this newsletter.
