All advisors have heard the adage, “Sell in May and go away.” While it may have rung true in the past—and while current macro economic issues are causing investors to pull back—there are still opportunities.
Seasonal trading trends are certainly a concern. But Colum McKinley, vice president of equities at CIBC Asset Management and manager of the Renaissance Canadian Core Value Fund, says they should focus instead on the long-term. Don’t let clients’ emotions guide their decisions; it’s your job to provide a sober, consistent and objective view of the market.
“Advisors should also take advantage of volatility in the marketplace,” adds McKinley, “and help clients buy good stocks at attractive prices.
“Volatility and economic issues occur year-round, and professionals should be [aware of but] indifferent to market headlines.”
McKinley has consistently seen opportunities to deploy capital in the current marketplace. He also continues to accumulate positions in companies his firm has held over the long-term.
“As others sell their stock due to their anxiety over market headlines, advisors have the opportunity of adding to their clients’ positions in high-quality companies,” he says.
In his own client portfolios, he’s invested more in Magna, one of the largest auto-parts companies in the world.
In the process of reviewing client portfolios and considering new investments, clients should consider companies with great management teams and attractive pricing. Also, look at the company’s average dividend yields.
“If you base your decisions on the past or on current market fluctuations, you won’t generate consistent excess returns over the long-term,” says McKinley.
He adds, “This may work in isolated instances but, as a rule, advisors should build, develop and maintain a process based on disciplined value investing. Doing so will generate good and consistent result for your clients.”