June, the numbers suggest not a good month for equities

Looking at the falls so far in June, especially deep in emerging markets, Japan, Europe and the UK, you would be forgiven for thinking that "Sell in May" is in full swing, but as usual it might not be as simple as that (sell in May, stock market myth or reality). Sell off for June may be more appropriate.

In the last 22 years the FTSE100 has fallen in June 73% of the time, the average performance being -1.4%.

http://www.cityindex.co.uk/market-analysis/trade-statistics/11787652013/ftse-june-infographic/

But as can be seen by some of the "Sell in May" stats, a bad June doesn't always follow through.

June does have a habit of being a bad month for equities though and this year after such an unrelenting bullish start to the year, the pace of which couldn't be maintained, there had to be a sell off at some point. It's almost as if the market was gearing itself up for a correction and June seems to be a good time for it.

The interesting thing about this sell off is that from a news standpoint we have not been going through a particularly bad period of news. If anything the news is mixed, not overly good or bad, but the market sentiment has changed in the last month, so that any good story is now largely ignored, or it's not good enough. Of course, when the market's going up any bad news story gets the same treatment, ignored. However, the "fear" word does appear to be back, even if the fears seem to be more imaginary than having any basis in fact.

I've long taken the view that the stock market is no more than a sentiment market, which will often use fundamentals, or the lack of, news - good or bad, to justify whatever the prevailing sentiment majority opinion in the market happens to be at that moment in time. I've never seen stock markets as particularly efficient either, they always seem to be too bullish or bearish, rarely is a happy medium ever achieved.

It is almost pointless trying to apply logical or rational thinking to why the market behaves the way it does, yet this is what investors are essentially trying to do when picking companies to invest in. We try to come up with systems, analysis, a way of doing things that will pick us a winner, yet the market itself is largely about sentiment. How to balance these? No easy answer to that one.