“There’s no use trying,” she said: “one can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

– Through the Looking Glass, and What Alice Found There (Lewis Carroll, 1871)

Welcome to the Dog Days of Summer, that heady time when leisure pursuits turn to lazy days at the shore, our senses teased by the fragrance of suntan lotion and ice cream dribbling in tiny rivulets down our chins. Indeed, summer’s that time of year when it feels like all’s well with the world and always will be.

“So what does any of this have to do with investing,” you could rightfully ask. This is an investing site, after all. Bear with us, dear investor, we’ll get you there shortly.

You see, summer for many is vacation time, a time to kick back and enjoy the recompense of making it through winter’s bleakness. Not so, however, for your portfolio. That gets no break; it has to keep working for you for as long as you’re invested in the market. So, to keep you on top of your investing game, we’ve outlined six financial tips and best practices for the summer months. And no, none of them are impossible, and you don’t have to complete them before breakfast.

(1) Sell in May, Then Go Away — Not

This adage originated in England, and its genesis had nothing to do with investing. Professional investors, however, applied this meaning to the stock markets, and it stuck. What it once meant is that during summer, the markets were quieter, there was less liquidity, and portfolio values were likely to fall. So, traders sold off in May and went back into the markets after Labor Day. Whether or not that still happens is debatable. You, however, should take this with a grain of salt. Instead, keep a steady eye on your portfolio’s summer performance, conduct research on which stocks tend to perform well in the summer months, and, if necessary, re-orient your portfolio to ensure it’s delivering on its promise. And yes, you can do all of this from the beach or poolside while relishing that Aperol spritzer.

(2) Be a Tortoise; You Know What Happened to the Hare

A tortoise is not an animal with which one would readily want to be compared. The ponderous reptile, however, can teach us a lesson or two about investing. Slow and steady is the name of the game, so if you ever grow impatient with your portfolio’s performance, remind yourself this is a marathon, not a sprint. Keep an eye on your holdings during the summer, but don’t obsess about them. You’re in this for the long haul. Go and enjoy yourself.

(3) Yearnings for Earnings

Public companies report their earnings four times each year, one of which is in the summer (July). This is a good time to pay careful attention to your portfolio and the manner in which the earnings may impact your holdings. The earnings of specific companies and the opinions of analysts who follow those stocks may also provide you with signals as to whether you should stay invested in the company or sell out and look for other options. Today’s ubiquitous connectivity will allow you to listen to earnings calls and monitor the performance of companies, all from the comfort of your chaise lounge.

(4) Dividend Divination

Earnings periods are also when dividend-paying companies will declare (or not) a dividend. If they do, you’ll likely receive a check in the mail. While you might be tempted to spend it on a new pool float or a nice getaway, instead, since this is money you didn’t necessarily count on, consider re-investing it in additional shares of that company. The more shares you own, the higher your dividend payout. Some companies have what’s known as DRIPs, or Dividend Reinvestment Programs. In those instances, your dividends will automatically be reinvested in the company. It doesn’t get much easier than that.

(5) Harvesting – Not Just for Farmers

So, you bought shares of a company for which you had high hopes, but that investment failed to live up to its promise. Now it’s worth less than you paid for it. Not a happy day for you, and we fully empathize, but it happens to every investor. So what do you do now? The first rule is don’t panic. You’re playing the long game here, so sit back, ride out the underperformance and wait for the shares to start climbing again. Or, if you’ve truly fallen out of love with the company, you can harvest your losses. Simply put, tax-loss harvesting is when you sell shares or other securities that are now worth less than you paid for them. When you harvest these losses, you can offset the taxes you have to pay on the gains from your investments that have risen in value. And, those same losses can also be used to offset your income.

(6) Retirement Ruminations

What better time to think about retirement than on a summer vacation? Imagine if every day could be like a lazy beach day — and it could. But what you first need do is ensure that your retirement savings plan house is in order. Take the slower summer months to meet with HR to determine if you’re getting the most out of your company’s 401(k) plan and match, reassess your retirement portfolio to see if you’re properly invested, and contribute as much as you possibly can. Becoming a 401(k) millionaire is well within reason. And, before you know it, you’ll be relishing those languid summer days every day.


This information is provided for educational purposes only. Past performance is no indication of future performance.