For investors, it means: “Sell in May, go away, don’t come back ‘til St Leger Day”. This saying is trotted out every year by those in the know – and those with no idea at all.
Plainly, it is a lot of rot: especially this year when, if you sold out in May, then you would be out of pocket – the FTSE 100 was at 6241 at the end of April.
Figures from the Investment Association show that in July, £1bn was withdrawn by retail customers from funds – and that came after the stonking £3.5bn taken out in June. July’s figure would no doubt have been worse had not property funds suspended trading.
So even though the early summer should have offered a good buying opportunity, investors chose instead to sell. But actually, it could be this month that is the bad month for investing.
According to Jason Hollands, from Tilney Bestinvest, there have been seven stockmarket slumps in September since the 1990s: remember Black Wednesday? Lehman Brothers?
Both caused share slides in September. And since 1986, September is the month with the worst average total return on the FTSE All Share index – typically the index has fallen 0.94 per cent in all those Septembers.
Will this September be disastrous for shares? What with a presidential election nearing, worries about China and all the rest, then maybe it will. But then who really knows? Perhaps, instead of the Sell in May saying, we would be better to adopt one penned by Mark Twain.
In Pudd’nhead Wilson, he writes: “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February”.
The answer, as Twain did not go on to say, is to ignore all the superstitions about when is a good time to invest. If you are willing to bear the risk, then any month is fine: which of course is the argument in favour of regular saving.
Will this September be disastrous for shares?___________________________________________
You reap what you sow
September is back-to-school time: a wallet-emptying time for parents. By now, they will have bought the expensive new games kit which will probably vanish before half term, even though they have lovingly stitched in countless name tapes.
And for those with children in private education, there are this term’s fees: you may have possibly had to sell a kidney to pay this bill. Figures from Lloyds bank show it costs nearly £160,000 to put a child through a private day school from reception to A’ levels.
Over the past five years, school fees have gone up by 21 per cent – far more than inflation.
So why do parents put up with it? Their eyes are, of course, on the final prize: the passage of their child onto a coveted Russell Group university place. And private schools generally get better exam results than state ones.
A few years ago, I read a piece by a middle-aged woman who was panicking about her lack of savings and pensions. She asked a financial adviser what she could do.
He remarked that the best thing was to carry on paying her son’s school fees – in the hope he would get a good education and then a lucrative job so he could keep her in her old age.
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Ignorance is not bliss
Asked whether pensions or property were better for retirement planning, the chief economist of the Bank of England Andy Haldane told The Sunday Times last week: “It ought to be a pension, but it’s almost certainly property.
This is despite Mr Haldane having the kind of pension the rest of us can but dream of – nearly £84,000 and likely to be far more by the time he retires. Earlier in the year, Mr Haldane said he could not make “the remotest sense of pensions”. In his position, it does not really matter if he understands them or not.
For those of us who do not have pensions as safe as the Bank of England, we cannot risk not knowing what we are doing. And really, what is so difficult about pensions after all?
You put money in, get tax relief, then, when you are old, you take the money out and spend it on frivolous things such as food, fuel and the like. Sounds easy enough to me, but what do I know? I am not the chief economist of the Bank of England – oh, wait a minute.
Charlotte Beugge is a freelance journalist
Tony Hazell is away
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