April 10th, 2012 Why share prices may come down this quarter? Benefit from our actions Dear subscriber This coming quarter we will see a deluge of first quarter results from US-listed companies, while a number of London-listed companies will report annual results. US companies reporting season is important to UK investors as often the London stock market follows Wall Street trends. On a ‘macro’-level, in the past, US shares have risen (somewhat) in advance of each new reporting season, often giving back some of these profits due to expectations not being met. What happened in 2011? Last year, the S&P 500 peaked on May 2 at 1,370.58. By early August, it had dropped nearly 20 per cent and was testing support at 1,100... It took the S&P until last February 2012 to get back to that 1,370 peak. . . . and what about 2010? In 2010, the S&P 500 hit an intra-day high of 1,219.80 on April 26. By early July, the index hit an intra-day low of 1,010.91. That was a 17 per cent decline — and it took until November for stocks to regain their April highs. Since the US stock market bottomed on March 9, 2009, the simple “sell in May” strategy has been rather effective the last two years for short-term investors and speculators. However, I normally do not spend much time considering a ‘trend’ based on just two recent observations. Nevertheless, it is a pretty safe bet that we are going to hear a lot more about the “sell in May” phenomenon in the days and weeks to come. And, I suppose, we can also assume that a lot of short-term investors and speculators are going to have increasing itchy trigger finger poised over the “sell” button. Is it different this time . . . With signs that the US economy is apparently ‘picking up’, and following the Fed’s recent statements about QE3 — that it may not be necessary — I suspect that some investors and speculators will be playing it safe and may not even want to wait for a ‘traditional’ late-April/early-May exit point. This time round, the FED has kept it deliberately vague if and when it will embark on another Quantitative Easing program. Previously, the easy money from the FED has allowed asset prices to recover quickly helping to boost share prices. However, once a sufficient number of commentators and investors start to believe that QE3 is unlikely to happen anytime soon, or, at all, share prices of those sectors which have particular done well out of previous two QE programs are likely to suffer, subject to how first-quarter corporate results in the US pan out. 2012 ISA Allowance Season Started For more information download our Free ISA Guides and other saving, investing, trading and retirement guides Benefit from our actions By now, premium content subscribers at Dividend Income Investor.com are reading the actions we are taking to benefit from any possible share price sell-off in the coming months of selected high quality dividend paying companies. You too can benefit from our premium content! By considering dividends from high quality dividend paying companies, but only when they are historically undervalued, you are not only staying ahead of inflation and increasing your income; you also build up a nice growing nest-egg. What’s more . . . We still have 173 lifetime 25 per cent off offers available. This is a strictly limited deal. Earlier in December 2011, we set aside just 250 discounted subscriptions for our loyal font Dividend Alerts readers on a first come first saved basis. Subscribe to Dividend Income Investor.com’s unique share valuation service at the substantially reduced price of only £82,49 per YEAR each Year! Or, £134.99 for two years, and subsequent two years. Click Here to Find out More Do it now! Until next time Till next time Steven Dotsch Managing editor EMAR Publishers Dividend Income Investor.com Twitter.com @Investoretire Know someone who'd like to receive Dividend Alerts themselves? Simply forward this link to anyone you think could benefit from our publication: https://www.early-retirement-investor.com/dividend-alerts.html Reclaim dividend withholding tax ISA and SIPP investors with foreign stocks and shares are exempt from UK tax but not from foreign dividend withholding tax. Reclaiming dividend tax abroad is very much a specialist activity and is also rather laborious. Let Taxback assist you in reclaiming what is rightfully yours. Dividend Alerts is an unregulated product published by EMAR Publishing, publishers of Early Retirement Investor.com EMAR Publishing is not registered as an investment advisor or financial advisor. We do not and will not provide personalised investment or financial advice, or individually advocate the purchase or sale of any security or investment. We publish opinionated information about the stock market and companies that we believe our subscribers may be interested in. There is no guarantee that dividends will be paid. Figures are calculated using the closing prices. All gains are gross, and returns will be affected by dividend payments, dealing costs and taxes. Profits from share dealing are a form of income and subject to taxation. Tax treatment depends on individual circumstances and may be subject to change in the future. 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