Hedge Funds Sold $1 Trillion Early 2025: Sell Before May or Hold the Rebound?
Federal Reserve Governor Harker stated that if the economic data in June provides a "clear and convincing direction," a rate cut may happen in June.
Following comments from Waller and Harker, $NASDAQ(.IXIC)$ rose by over 2.7%, marking its third consecutive day of gains exceeding 2%, the first such occurrence since May 2001. $Dow Jones(.DJI)$ increased by more than 1%, and $S&P 500(.SPX)$ rose by 2.03%. $Tesla Motors(TSLA)$ closed up 3.50%, and $NVIDIA(NVDA)$ gained 3.62%.
Stronger-than-expected earnings reports supported the rebound in US stocks.
Goldman Sachs believes the reasons for the rebound are becoming more compelling. One reason U.S. stocks have managed to stabilize is the relatively decent performance of recent corporate earnings reports.
While many companies have withdrawn previous earnings guidance, the downward revisions have generally not been severe.
Goldman Sachs notes that "with signs of de-escalation in the trade war, light positioning (U.S. net long and short fund leverage is near a five-year low), and improvements in market technicals, the case for betting on a stock market rebound is becoming increasingly strong."
After hedge funds have sold around $1 trillion, is it time to switch to a rebound?
JPMorgan points out that most of the U.S. stock sell-off since the beginning of the year has come from equity-focused hedge funds, with a total reduction of around $750 billion.
Another significant source of sell-offs has come from hedge funds relying on momentum strategies, such as CTAs. These funds began to unwind their large long positions in mid-February and turned to short positions in early April, with the total sell-off amount expected to be around $450 billion.
Meanwhile, short interest in the S&P 500 ETF has surged since early 2025.
In contrast to hedge funds, individual investors continue to buy US stock ETFs, with monthly net purchases maintaining a steady pace of around $50 billion. JPMorgan's report highlights that the continued buying from individual investors is an important support factor for the U.S. stock market.
With the May effect approaching, should investors sell in advance or continue holding?
The question now facing investors is whether markets will deteriorate further during the historically weaker period between May and October.
A 2022 study analyzed stock returns across 37 countries and found that returns from November to April were significantly higher than those from May to October.
A more recent 2023 study by Manulife Investment Management compared the "Sell in May and go away" strategy with a buy-and-hold approach over a 50-year period.
The findings showed that the buy-and-hold strategy generally outperformed the seasonal approach, suggesting that while the seasonal pattern exists, attempting to time the market based on this strategy may not be advantageous for investors.
How do you cope with May seasonal pattern?
Would you sell in advance or keep holding?
Have you bottomed hunting cheap stocks in previous selloff?
Is it time to switch or prepared for more pains?
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During the recent selloff, I took the chance to add some quality names at lower prices. Hedge fund selling created some pressure, but steady ETF buying from individual investors like myself helped stabilize the market. The overall tone now feels more constructive.
That said, I’m staying cautious. I won’t rush to sell, but I’m keeping an eye on economic signals. If things change, I’ll consider adjusting my exposure. For now, I’m holding on and watching how this rebound plays out.
@Tiger_comments @TigerStars @TigerEvents
Federal Reserve Governor Harker stated that if the economic data in June provides a "clear and convincing direction," a rate cut may happen in June.
Following comments from Waller and Harker, $NASDAQ(.IXIC)$ rose by over 2.7%, marking its third consecutive day of gains exceeding 2%, the first such occurrence since May 2001. $Dow Jones(.DJI)$ increased by more than 1%, and $S&P 500(.SPX)$ rose by 2.03%. $Tesla Motors(TSLA)$ closed up 3.50%, and $NVIDIA(NVDA)$ gained 3.62%.
A 2022 study analyzed stock returns across 37 countries and found that returns from November to April were significantly higher than those from May to October.
How do you cope with May seasonal pattern?
Would you sell in advance or keep holding?
Have you bottomed hunting cheap stocks in previous selloff?
Is it time to switch or prepared for more pains?
leave your comments to win tiger coins~
- when VIX is above 34
- when fear indicator is high
- in wave 3 or wave 5 of downtrends
- keep a close watch on US20Y and US30Y treasury
seasonal trends so far past years have shown to be not too consistent given that every year, the negativity has been different
我自己在四月那波抛售里，其实是有逢低捡便宜的——像Adobe、AMD这些前期跌得狠但基本面没问题的股票，我趁恐慌情绪高涨时加了一些仓位。现在看，虽然抄底的点位还不算完美，但我宁愿错一点，也不想错过整个反弹周期。
至于现在是“继续持有”还是“准备撤退”？我个人倾向于继续持有，但同时做好防御性部署。原因有二：一是美股目前的宏观环境并不差，美联储虽然还未明确转向，但货币政策已经处于尾声；二是本轮调整更多是情绪与技术层面的释放，像是对冲基金的快速去杠杆行为，并不是企业基本面集体恶化。
当然，我不会全仓梭哈，也会逐步调整仓位结构，把一部分资金移向现金流稳健的公司和抗压性高的板块，比如公用事业、医疗保健类股，这样无论市场继续反弹还是再来一次回踩，我都能有空间应对。
总结一句话：**我不怕5月的风浪，但我一定会系好安全带。**与其逃避，不如策略性面对。