Markets were very nervous at the opening of the American stock exchange today..
Many are afraid of inflation, winding down incentives from central banks, unexpected bankruptcies and other misfortunes. This raises a fair question: when to go to the cache?
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Investors have been looking very optimistic lately. Biden proposes to raise taxes? Stocks are falling, but are redeemed literally in a day. In many countries, an increase in infections? The indices are still looking up. The feeling is created, that the market is focused only on, that the economy will recover from the pandemic. And no one pays attention to risks yet - this is so, "Little things".
Further developments with tax increases in the United States will surely shake up the markets more than once., as well as doubts about the effectiveness of vaccines. Nevertheless, till FED will continue to print all these drawdowns, probably, will be redeemed - now I see this trend.
"Sell in May and go away" is an old adage, the main idea of which is, that after the release of financial statements of companies in the spring and before the summer vacation season, investors, usually, prefer to take profits and go to the cash.
I will not judge this - everyone has their own vision. But I will say one thing: they, who came up with this expression, didn't know, what is an ever-working printing press from regulators. Today, seasonality has become less important against the background of the, that the Fed, ECB, Bank of England, Bank of Japan and others are pouring money into the financial market and pushing stock and bond prices up.
Therefore, the answer to the question “When to go to the cash?»It is not so easy to give in relation to a specific month.
I see three main scenarios, in which investors can change their optimism to serious panic.
1. The same recovery will take place, which everyone dreamed about and disappointment will begin. Economic growth will be accompanied by a shutdown of the printing press by central banks - then fear will be added to the disappointment.
2. The wave of defaults, which can occur anywhere. Whether it's defaults in emerging markets (that's why we keep an eye on Turkey and other developing countries) or developed, like the collapse of Archegos.
3. Pandemic surprises. Can't be ruled out, that the virus is mutating and / or that vaccines will be ineffective.
The first is predictable. It is the Fed, probably, will be a major regulator, which will reduce incentives before the rest. This may well make investors aware, that the attraction of unprecedented generosity will end sooner or later. Then corrections can begin.
Do not panic, least, until the next Fed meeting. Powell said yesterday, it’s not time to talk about cutting asset purchases: “We have one excellent employment report. This is not enough. We're going to be evidence-based, not a forecast, we just need to see more data. " So in a month or two, if there are positive data on employment growth in the US, we may very well hear hints of folding QE. If this is accompanied by inflation, hints will be fatter. And this will definitely become a reason to increase the share of safe securities in the portfolio..
With unexpected bankruptcies and virus outbreaks, it's harder. It is impossible to predict here. Investors, judging by the growing quotes, the likelihood of these scenarios is underestimated.
So long, in my opinion, the moment has not come, to totally go to the cash.
Investor fear index (VXX) remains low, and regulators continue to pour money into stock market. And the phrase "Sell in May and go away" is not relevant yet. 
Nevertheless, risks accumulate in the global economy. To defend against them, it makes sense to make the approach to investments more conservative and increase the share of reliable securities in the portfolio right now. In parallel, it is important and necessary to monitor macroeconomic data in large countries and, in particular, in USA. Than they will be more positive, the closer the moment of market disappointment may be.
