May: a haunted month for Brazilian markets?

Among the most standard pieces of advice about investing is that past returns do not ensure future profits. However, when it comes to previous losses, investors do seem to believe in patterns. To this end, some speculators have been cautious about this month of May—which has historically been one of poor performances for Brazilian markets.

In the 24-year run between 1994 and 2018, the São Paulo stock exchange benchmark index Ibovespa has risen only eight times during the month of May. Since 2009, the month has been the textbook definition of a “bear market”—that is, when stocks are performing negatively, thus encouraging sale. According to data provided by analyst Jonathan Camargo, from consultancy London Capital consultancy, May was the worst performing month of 2010, 2012, 2016, 2017 and 2018.

In market parlance, “black swans” are events that deviate beyond what is normally expected of a situation and are extremely difficult to predict. In Brazil, these occurrences have persistently happened in May.

In 2017, a leaked audio clip of a conversation between businessman Joesley Batista, the owner of meatpacking giant JBS, and then-President Michel Temer almost brought down the government. In the leaks, Mr. Temer appeared to have condoned the payment of hush money to an imprisoned former house speaker. To remain in office and avoid prosecution, Mr. Temer used all his political muscle, essentially burying any chance of approving his...