- The proverbial "sell in May and go away" saying on Wall Street warns of seasonally weak stock-market performance during the summer months.
- But JPMorgan quant guru Marko Kolanovic believes investors should "buy in May and go away," according to a Thursday note.
- Kolanovic expects near-term upside in value and cyclical stocks to drive the market higher as the US economy continues to reopen.
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Historically weak seasonal performance in the stock market over the summer months will be overruled this year by gains driven by economic reopening, according to a Thursday note from JPMorgan's Marko Kolanovic.
"Buy in May and go away," Kolanovic said, pointing to expected upside in value and cyclical stocks that are poised to benefit from increased economic activity as the COVID-19 pandemic begins to recede, as well as rising interest rates and a jump in commodity prices.
Kolanovic expects the move higher in stocks to accelerate into late spring and summer, going against the proverbial Wall Street saying "sell in May and go away," which refers to the weakest six-month period for the stock market that ends in November, based on historical data.
"We reiterate a view that the reflation and reopening trade will continue, with yields moving higher and a rotation from growth, quality and defensive to value and cyclicals occurring," Kolanovic said, adding that he expects the move to accelerate this summer.
If Kolanovic's projection materializes, investors will likely be surprised.
"Importantly, we do not believe these developments are priced in, and believe the reopening and reflation trade will resume with a move that will be bigger than we saw early this year," Kolanovic said.
And a surge in everything from copper to oil prices bodes well for value and cyclical stocks as a near-term catalyst, according to the note. Commodities have been surging due to pent-up demand from consumers and supply chain imbalances stemming from the COVID-19 pandemic.
As investors navigate the weakest months for the stock market, don't sell and buy value, JPMorgan recommends.