Near the end of April, investors start seeing the oft quoted "sell in May and go away" saying in the finance news. It is referring to a seasonal weakness in the market when US traders take profits that were gained over the first quarter of the year. There's a lull in business news after a reporting season and it also roughly coincides with the summer vacation period in the US that starts in late May.
Because the US stock market has considerable influence on other markets, even Australia can follow suit, trailing down until things pick up again.
In 2012, the S&P ASX All Ordinaries Index (ASX: ^XAO) fell about 10.5% from April 30 to a low in late May. It revisited that low in July, but didn't slip any further down and set the low for the year.
In 2013, the sell-off didn't start until late May and hit a bottom in June after the index dropped about 9%. Again, that was the low for the year.
Whether it happens or not, for long-term investors, it should be a time when you pull out your stock shopping list, sharpen your pencil and get ready for any potential bargains.
Here are four stocks that are good as they are now, but even better if they were discounted 10%-15%.
Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES) would be good to have for your portfolio. Both announced reasonable revenue growth this week.
Both stock prices are at or near all-time highs and they may shift up into higher price ranges over the next couple of years. A quick slip down in share price would be welcomed.
I would keep track of fund managers like Perpetual Limited (ASX: PPT), which had a strong run up in price from the recovering stock market and general economy.
Another industry to watch is housing construction. Lend Lease Group (ASX: LLC), the property and infrastructure developer, can benefit from the rising housing market. In addition, it can see more business in the retail and commercial property market that usually follows upward growth in the economic cycle, when companies expand stores and facilities more.
Foolish takeaway
Whenever you have a time period when people are selling, attractive discounts or even good bargains may pop up. Instead of worrying about it, wait for any sell-off to run its course and possibly start your buying then.
