There’s an old adage in the stock market: “Sell in May and go away, don’t come back until St. Leger’s Day.
The popular investment saying recommends investors square off positions in May and step away from the market until October, after the St. Leger Stakes horse race has been held in mid-September.
It’s thought to date back to when trading was an activity that took place in person on the floor of the Stock Exchange. Investors were wealthy and typically left London for the countryside in the summer months.
This meant trading was thin over the summer and returns often lacklustre.
The maxim may have held water when trading was carried out in person, but is less relevant today, when trading is largely electronic and volumes are much less likely to evaporate over the summer.
Over the past 30 years, UK equities fell only six times between the start of May and the end of September.
Furthermore, portfolios today also tend to be far more global, often containing US and European equities alongside UK stocks, as well as bonds and other assets.
Whether or not selling in May and going away bears fruit in any given year, it should be irrelevant to sensible long-term savers.
A much better adage for them might be: “It’s not about timing the market, but about time in the market.”
Take expert advice. Stay invested for the long run. And the chances are you will do better than trying to profit from turning points in the market.
As always, thanks for listening.
Martin.
Martin Brown, managing partner at Continuum, was talking to Gary Parkinson, former financial journalist at The Times and BBC.
Gary Parkinson
Media Relations
T: 0345 643 0770 M: 07756 668500
