The S&P 500 continues to power higher despite the ongoing worries that appear to be growing from some vocal growling bears. We have commented in our previous updates that the ongoing rally is certainly “Climbing the Wall of Worry”. Now we are entering a period that has been referred to as “Sell in May and Go Away”, which only gets bearish forecasters and investors even more anxious.

We are well aware of the historical track record that does indeed show that the period from May till the end of October has provided lower returns than the November to April period. Nevertheless, we do not change our recommendations based on the flip of the calendar alone. Our research still strongly portends good investment returns and a lot of opportunities to avoid expected laggard areas and have healthy exposures in outperforming parts of the equity market.

We fully agree with a famous investing quote that states, “Be fearful when others are greedy and greedy when others are fearful,” and we see some fear out there in the marketplace.

Based on our research, we at FSI firmly believe that active management of portfolios can beat passive strategies over time if one employs disciplined data driven approaches to investing. It may not be easy, and everyone may not be able to achieve this, but our work suggests that it is clearly obtainable. Though, it does take restraint and patience.

With that being said, it has been our expectation that the early parts of 2021 were going to be bumpy as we presented in our outlook publication from January. And thus far, the year has been full of challenges. How are investors expected to deal with such a tricky environment? We maintain the view that a disciplined process driven approach should add considerable value to investors and help them avoid being overly impacted by the continual noise from news headlines and emotional responses that are the direct consequence of day-to-day volatility.

Notably, our proprietary investment process continues to recommend that investors should retain a medium-term view and keep their eyes on the bigger picture that should keep supporting the U.S. equity markets for the remainder of the year. The tailwinds that should help fuel continued equity gains should come from the powerful combination of accommodative Fed policy, the reopening of the U.S. and global economies, and a major corporate profit recovery that is driving considerable strength in the earnings revisions backdrop. Thus, our bottom line that is derived from our methodology and key indicators is to remain bullish, and view tactical pullbacks and volatility as buying opportunities.