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  • Christian Armbruester

Darling Buds of May, Revisited, Again

Global stock markets are up about 10% this year. Never mind what they say about May, but is there ever a time when we should take some money off the table? After all, we have just received the entire expected annual return for equities in a mere 4 months, and last year wasn’t half bad either.

The problem with getting out is that we don’t know at what level we can get back in. Sitting in cash and waiting for the markets to come our way can be very expensive if we are wrong. There is also a big difference between trading and investing. If you want to do the former, then you have to do many trades for the numbers to work out.

Another reason we may want to take profits, is because there are better investments to be made. What has historically been able to generate better returns than holding equities for the long term? Not much. Private equity and property have an illiquidity premium. Same for venture capital, which is also highly speculative, as is investing in cryptocurrencies, but for different reasons.

Hedge funds may have better risk adjusted returns, but nothing compares to the growth from the likes of Microsoft, Apple or LVMH in the last three decades. What about bonds? All we know is that those investors that bought 30-year Gilts and Treasuries four years ago, will need to hold on for another 26 years to earn a yield of 1%.


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