Old adage pays off

Old adage pays off

Advisers who urged clients with emerging market exposure to follow the adage ‘Sell in May and go away, come back on St Leger’s Day’ – a horse race held in early September – would have done well, an analyst has claimed. Graham Spooner, investment research analyst for The Share Centre, said those clients who sold before the market hiccups would have locked into good prices and missed out on turbulent times.

He said: “‘Sell in May and go away, come back on St Leger’s Day’ is based on the historical seasonal decline in the markets.

“If a client’s portfolio was geared or overweight in mining and oil shares, or exposed to other global markets – especially emerging markets – then selling in May would have been a rewarding strategy. For anyone with a more balanced UK portfolio, once dealing costs had been taken into account, it may not have been quite so clear-cut.”

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Between 1 May and St Leger’s Day, the FTSE 100 fell by approximately 12 per cent and the FTSE 250 by close to 3 per cent.

Adviser views

Laith Khalaf of Bristol-based Hargreaves Lansdown said: “Investors should ignore the St Leger Day adage, even though it was a winning strategy this year. Generally, long-term investors should not try to sell out of the market until they start to approach drawing on their money, at which point they should start to think about reducing risk.”

Philip Milton of Devon-based Philip Milton & Co, said: “We do not invest superstitiously, though there is some merit depending on what has gone before.

“Still, with current benign conditions and some seriously cheap stocks in certain sectors, it could be a good autumn and a buoyant winter.”