On Tuesday 29th May Funds Centre published an article by Sarah Modlock under the title “Sell in May and Go away?” but what does this statement really mean? It is an old adage ‘Sell in May and go away; don’t come back ’till St Leger’s Day’ which prompts investors to sell their stock in spring when the market is expected (by some) to dip for the summer. Saint Leger lived about 1400 years ago and lots of incredibly nasty things happened to him as part of his martyrdom.
His feast day is 2 October and it is from this point in the year that the custom says you should begin to invest again. In the
Also this can be supported by the past analysis of many countries where the effect has indeed occurred and is the strongest in
This can be supported by the fact that the trend was strongest in 2004 when stock market returns were only 0.3% over the summer quarter. But on the other hand, the year before that the market bucked this trend and rose by +10.2%, but this was largely due to the end of the war in
Another school of thought looks to the US dollar for its clues on when to sell. New research reveals that a weak dollar is one of the best buy signals around. And with the dollar close to record lows against both sterling and the euro, this indicator signals that the FTSE 100 could hit its all-time high of 6,930 before the autumn. In other words, not a good time for investors to ‘go away’. The Footsie has gained 5% so far this year, closing at 6,555.55 at time of writing, after recovering from its February and March slump.