Navigating the Storm: How to Profit from Geopolitical Jitters and the 'Sell in May' Slump

The markets are a mess, folks. Geopolitical tensions are at a fever pitch, and the "Sell in May and Go Away" adage is feeling more like a self-fulfilling prophecy this year. Between Russia's war in Ukraine, U.S.-China trade spats, and cyberattacks rattling energy grids, investors are right to be on edge. But here's the thing: volatility is your friend if you know where to look. Let me break down how to play defense now while setting up for a rebound when the dust settles.

Why “Sell in May” Still Works in 2025

The “Sell in May” mantra isn't just folklore. Historically, the S&P 500 has underperformed from May to October, averaging a 0.4% gain versus 6.5% in the other six months. This year, the adage is getting a boost from real-world chaos. Central banks are keeping rates high to fight inflation, energy supply chains are still shaky, and tech stocks are whipsawed by trade wars. Add in summer doldrums and you've got a recipe for sluggish trading.

But here's where the opportunity lies: Use this period to buy what's on sale in defensive sectors, then pivot to growth when markets stabilize.

The Defensive Playbook: Where to Park Your Money Now

1. Healthcare: Steady as She Goes
Healthcare stocks are the ultimate “buy-and-hold” sector. People don't stop needing medicine or doctor visits just because the Fed hikes rates.

Johnson & Johnson (JNJ) has a rock-solid 2.5% dividend yield and a pipeline of drugs for chronic conditions. Meanwhile, Pfizer (PFE) is cashing in on its mRNA tech beyond vaccines—think cancer treatments. These are stocks that thrive when the world feels uncertain.

2. Utilities: The Dividend Divas
Utilities are the unsung heroes of income investing. They're insulated from geopolitical noise because people need power no matter what.

NextEra Energy (NEE), the renewable energy powerhouse, has a 2.1% yield and is betting big on solar and wind. Even old-school giants like Dominion Energy (D) offer 4.5% dividends while the grid stays intact.

3. Cybersecurity: The New Defense Contractors
State-sponsored hackers are the ultimate wild card. Companies like Palo Alto Networks (PANW) and CrowdStrike (CRWD) are cash cows in this climate.

These stocks are recession-resistant and will only grow as cyberattacks hit critical infrastructure.

Backtest the performance of JNJ, NEE, and CRWD when buying on the first trading day of May and holding until October 31st, from 2020 to 2024.

Positioning for the Rebound: When Will the Calm Return?

Markets hate uncertainty, but they love clarity. Here's what to watch for:

• Geopolitical Triggers: A ceasefire in Ukraine or a thaw in U.S.-China trade talks (like a deal on semiconductor exports) could spark a rally.
• Energy Stability: If Russia starts exporting more gas to Europe, oil prices could drop, easing inflation.
• Tech Turnaround: Companies like AMD (AMD) or NVIDIA (NVDA) could rebound hard if supply chains stabilize and trade tensions ease.

Tesla (TSLA) is a prime example of a “rebound play.” It's down 30% since late 2023, but if lithium shortages ease and China opens its doors to U.S. EVs again, this stock could soar.

The Play: Go Defensive Now, Then Rotate

Short-Term (Next 3 Months):
- Buy: Utilities (NEE), healthcare (PFE), and cybersecurity (CRWD).
- Avoid: Cyclical stocks like industrials or energy unless prices drop further.

Long-Term (Post-Geopolitical Calm):
- Rotate into: Tech (AMD), industrials (CAT), and energy transition plays like lithium miners (LIT).

Final Warning: Don't Get Complacent

This isn't a free pass to ignore risks. If Russia escalates its war or China sells more Treasuries, markets could tank again. Keep 20% of your portfolio in cash or gold (GLD) as a hedge.

Bottom Line

The “Sell in May” slump is real, but it's also a setup for winners. Use this period to load up on steady earners, then pounce when the geopolitical fog lifts. Stay defensive, stay ready—and don't miss the rebound when it comes.

Action Alert:
- Buy now: JNJ, NEE, CRWD.
- Watch for: U.S.-China trade talks, Russian gas exports to Europe, and tech supply chain updates.
- Stay ready: Keep 20% in cash/GOLD.

The storm won't last forever. When the skies clear, you'll be positioned to profit.