Did you know that during the summer of 1929, stock prices continued to rise, defying the traditional market proverb"Sell in May and go away"?

This surge led to the infamous stock market crash in October of that year, which goes to show how unpredictable the market can be.

In this edition, we’ll go through the following::

• Berkshire Hathaway Looks Attractive: First, we’ll discover why Berkshire Hathaway’s combination of a lower stock price and rising book value is making it a compelling investment 🤑

• The Yield Curve Is Inverted, But No Recession: Next, we’ll explore the strange case of the inverted yield curve, a traditional recession indicator that has been present for 19 months 🤷🏻

• Sell In May, Go Away? Finally, we’ll analyze the recent performance of major indices like the Dow Jones, S&P, and Nasdaq, which have defied the usual summer slump 📅

Dive in and stay ahead with our expert insights on market trends and economic indicators. Here we go!

Berkshire Hathaway Looks Attractive 🤑

The combination of a lower stock price and rising book value has made Berkshire Hathaway more appealing.

Berkshire’s Class B stock is up 13% this year compared to a gain of 11.8% for the S&P 500.

Berkshire’s valuation has compressed to under 1.5 times the estimated June 30 book value from above 1.6 times at the peak in late February, according to Barron’s estimates.

Berkshire now trades close to its average of 1.4 times book value over the past five years 📈

Book value has long been a key measure for valuing Berkshire.

The Yield Curve Is Inverted, But No Recession 🤷🏻

The 3-month t-bill/10-year yield curve has been inverted for 19 months–since late October 2022.

Throughout history, inverted yield curves indicate a coming recession 📉

The past eight recessions going back to 1969 followed after the three-month T-bill rate exceeded that of the 10-year note.

That resulted in a tightening of financial conditions, which in turn invariably produced a downturn in the economy.

But economic growth remains strong and the unemployment rate is low 💪

In most of the occasions, not much time elapsed between the yield curve inverting and the recession beginning.

However, on two occasions the inversion lasted longer before the recessions started—the yield curve’s slope turned negative 19 months ahead of the November 1973–March 1975 downturn and 18 months before the short, sharp January-July 1980 recession.

If we don’t see the onset of a recession in the next month or two, it’s a good bet that we won’t see one ❌

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Sell In May, Go Away? 📅

Memorial Day came and went, but don’t expect these to be the lazy days of summer.

May hasn’t lived up to its reputation for being the time to sell and go away 🤨

Despite some recent volatility, the Dow Jones Industrial Average is up more than 3% this month while the S&P and Nasdaq are up 5% and 8%, respectively.

Many investors are still waiting for a summer sell-off.

They may need to keep waiting ⏳

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