Not surprisingly, “Sell in May and go away” strikes a chord with many investors. The cliche does not always apply but it is a good rule of thumb. Historically, stock investing during the period from May-November is fraught with danger or at best rewarded with meager returns.

Given that the tiger is a ferocious animal, this year is generally not good for risky ventures. To succeed in investing, we will need the traits of a tiger - courage, stealth and strength.

It bears remembering that the stock market is forward looking (about 6 months), so if you expect interest rate hikes in the later half of half of 2010, keep a close eye on the exit door when summer comes around.

In view of the challenging times ahead, I believe the stock market is too optimistic with its valuations of 15-25 times earnings. Stocks have rallied aggressively since March. Most of them are trading above their 200-day moving average and with no sign of slowing down. In this kind of bullish environment, fundamental analysis seems really foolish. A monkey, with no baggge of knowing how bad things really are, could have made huge profits just by throwing darts in the dark.

It is a matter of time before we experience another major recession because the key lessons from this financial crisis were forgotten easily and people are back to their greedy speculative ways. But the next time round, the Federal Reserve may find its hands tied, with very few options available.

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