May tests investors’ Market support

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Sometimes investing in the ASX is a bit like following a footy team. If it’s going well, then it’s all encompassing. But if the market turns ugly, as it is now, your support wanes somewhat.

The main difference is that with a footy team, you only have the weekend consuming you. But with speculative mining shares, or mid-caps for that matter, the reminders of your support occur every day from Monday to Friday.

Also, clients don’t generally call when things are going well, but you can be certain that you’ll get a few calling as the market turns south. Then you become psycho-analyst, financial advisor and a shoulder to cry on all rolled in to one.

That can be quite debilitating, as the constant reminder of share prices and your shrinking portfolio value gets a bit much. After a while, you start thinking about psychological damage and post-traumatic stress disorders; a bit like following your footy team when it’s not going well.

May and June are always difficult months in the share market. The old adage, “Sell in May, go away”, is as relevant today as when it was first coined. This is despite the fact that shareholders don’t have to physically crystallize losses on the market, they can just write off a loss at June 30 without selling.

The reality is that most investors treat this time of year as a good excuse to sell. There are always more sellers than buyers at this time, and as such share prices drop. It’s not rocket science.

At present, I can think of a number of exceptional stories in the junior resource market, but they are not getting the due respect they deserve.

A lot of juniors have used the buoyant market over the past 12 months to shore up balance sheets, with a huge amount of capital raised in this period. This bodes well for the future, as the companies that raised the money will not have to tap the market again for some time.

This should give those companies a good chance of realising their potential.

With raising cash no longer a priority, the companies concerned can concentrate on realising their full potential.

Realising this potential will be a hell of a lot easier in July, so hopefully my footy team and the ASX will be both having breakout months by then. Sell in May, go away!