Admittedly, the cliche is most beloved by the PR arms of fund groups, who then argue it is “time in” the market, not ’timing’ the market – you see what they did there? – that counts. That said, journalists belove the cliche too because it is an easy 500 words and, smug phrase or not, the timing/time-in line has much to commend it.
Selling in May to, I believe, buy back in October is a strategy – and I use the word loosely – favoured by investors who rate historical trends as highly as or even more so than market fundamentals.
The November-April stretches do apparently have the edge over the May-October ones since the Second World War although often only in the sense that both periods went up, the former only more so.
What’s more, isn’t there something I am supposed to remember about past performance?
My understanding is the invocation to “sell in May” came about because in sum-mers past – and in a practice this column feels is very much due a revival – most of the City would melt away to Lord’s and Henley and Ascot and all the rest of the season. As such, trading volumes would be low and, when volumes are low, silly things can happen.
If this was QI, Stephen Fry would probably tell me that is all a myth and “sell in May” is inspired by astrology or Plato or something far more prosaic – brokers wanting to double their commission by persuading punters to buy the same stocks twice in a year? Surely not – but I’m afraid you’re stuck with me and I’m sticking to the Season theory.
So as the importance of cricket to the City sadly wanes and investment becomes a much more year-round sort of affair, we have less need to sell in May except … except … haven’t you had enough of this month already? I know I have and, while I haven’t sold, I am actually away. Yes, still in France, thanks for asking, and it’s been very lovely.
Writing at 8am your time the day after the election, the UK is inching towards a hung Parliament – seriously, monitoring the BBC updates has been like watching football on Ceefax – and I’m trying to look beyond the fact that all the pointless UKIP has managed to achieve in taking votes away from the Tories is make it more expensive for me to take my euros out of the cashpoint this afternoon. Maybe they consider that some sort of victory in itself.
Aside from that – and don’t feel too sorry for me as I did take the precaution of restocking my Chateau neuf-du-Pape supply last week – what’s really changed? The odds last week were on a hung Parliament and that is what has happened. Surely, as members of Her Majesty’s financial services industry are so fond of saying, it is all in the price.
Mind you, I would be a bit more sanguine if the last few days had not seen investment professionals from all around the world reacting to the Greek crisis with all the sang-froid of a cartoon elephant who’s just spotted a mouse. Wasn’t that all supposed to be in the price too? Certainly, I notice I was writing about likely IMF bailouts and riots on the streets of Athens in this space three months ago.
Instead, we have investors acting as if it’s the end of the world, yet – with the greatest of respect – we are talking about Greece here. What will be the response if, say, China starts reporting weaker growth numbers?
Now that really would have me joining the rest of the market shriek-ing and balancing precariously on a stool. In the meantime, I shall be whiling away the weeks before the Lord’s Test trying to find a rhyme for “Sell in April and …”