Menu
Finance
Cutting These 10 Everyday Expenses in 2014 Will Save You $8,844
How to Perfectly Plan Your Divorce to Protect Your Assets
PNC Bank Review – Overview of PNC Bank Accounts, Loans and More
Here’s Why Bank of America Just Closed Your Credit Card Without Telling You
2014 Academy Award Statue Valued at Just Under $400
Why You Could Start Seeing Your Credit Score on Your Credit Card Bills
How to Host Your Academy Awards Viewing Party on a Budget
Warren Buffett Reveals His No. 1 Investment Strategy That Anyone Can Follow
Your ATM’s OS is a Decade Old: Here’s Why Banks Are Scrambling to Update It
What You Need to Know About Obama’s $3.9 Trillion 2015 Budget
Discover What a Discover Bank Online Savings Account Can Do For You
4 Tips to Cut Your Monthly Bank Fees
Here’s Why One Analyst Says Bank Stocks Are Going to Double
How Ben Bernanke Earned $250,000 in 40 Minutes
Visa and MasterCard Join Forces to Protect Your Card from Hackers
Does it really pay to sell in May?
Much is made each year of the old City adage that it pays to avoid the markets over summer: "Sell in May and go away, don’t come back till St. Leger Day".

The idea was that with so many sports-related social events in the summer months - Royal Ascot, Wimbledon, Henley Royal Regatta, Cowes Week, and ending with St. Leger flat race, on September 13 this year - that trading volumes plummet and stock market fortunes wane.

Of course in today's globalised markets, this seems at best far-fetched. The actual figures also cast considerable doubt on the theory.

Bestinvest, a broker, has crunched the numbers over the past 25 years. It found sell-offs often happen in the summer - but arbitarily selling in May each year and reinvesting in September would have been unwise.

The numbers in the chart below speak for themselves but for the record, it found that in 15 out of 25 years, the FTSE All-Share rose between May 1 and the second week of September.

Notable summer periods when the market did fall sharply were 1992 (-11.6pc), 1998 (-12.6pc), 2001 (-18.4pc), 2002 (-21.2pc), 2008 (-13pc), and 2011 (-10.9pc).

If investors chose to sell in May and stay away, their average annualised market returns would have been better in only nine of the 25 years and as an average would be 9.8pc instead of 10.9pc. That does not include the dealing costs for buying and selling.

Jason Hollands, managing director of Bestinvest, said: "Gone are the days when the City brokers departed to spend a leisurely summer at sporting events. These days markets trade globally and around the clock. So if there was ever any truth in the ‘Sell in May’ theory, the evidence since the Big Bang City reforms suggests that while there have been a handful of significant summer sell-offs which mean ‘average’ returns for the summer months are low, there is no compelling case to automatically get out of the market each May; indeed such a strategy rigorously followed would have reduced average returns."

With the FTSE All-Share sitting on a loss of 1.3pc so far this year, will the market turn profitable later in the year?

As Mr Hollands rightly observes, "it is of course impossible to predict short-term movements in the markets with accuracy" but with uncertainty over the situation in Ukraine and fears about rate rises here and a slowdown in China, he expects "a period of choppier waters".

Menu
Hey Ladies: Don’t Miss Out on the Broke Boyfriend Tax Exemption
3 Ways to Fix Your Finances in One Hour for Daylight Saving Time
IRS Reports This Year’s Average Tax Refund is $3,034
How to Start Saving Money for Your Baby’s College Education
How to Find Free Tax Preparation in Your City
IRS Wants to Pay You $25,000 for Saving Your Tax Return
5 Secrets Your Bank Doesn’t Want You to Know
How to Handle the 5 Most Awkward Money Situations
4 Tips to Cut Your Monthly Phone and Cable Bills
Stop Wasting Money Because You Won’t Admit You’re Old
Amazon Prime Price Hike: Is It Worth It?
10 Tips for Winning Your March Madness Bracket and Some Extra Cash
I Lost My W-2! What Should I Do?
4 Cheap, Fun Ways to Celebrate St. Patrick’s Day
What Four Leaf Clovers and Interest Rates Today Have in Common
Name
Name

Password