Sell in May, trumped
Posted on May 2, 2007 by Richard Beddard
Filed Under Markets |
A common theme in the financial press at this time of the year is the evaluation of the old market saying, “sell in May and go away.” Here at Interactive Investor we’re no exception. If analyst and author Peter Temple’s not selling, he’s thinking twice about buying. He thinks there could be double trouble in the market this summer because it has risen so far this year, confounding another statistically valid rule: that markets usually fall over the year, if, as they did, they fall in January.
Here’s something interesting, though. Chris Dillow, another fan of seasonal effects, is ignoring the rule this year, although he usually obeys it. That’s because he thinks another rule trumps it. That rule is to buy UK stocks when the dollar is weak.
My mind turns to mush with too much of this market math. Anyway I have a rule that trumps the lot, which is I’m not going to sell shares in a perfectly good company, or delay buying them, just because markets tend to do less well in the summer. It’s a good thing there’s people like me around, or there’d be no-one for Chris & co to sell to 
If you’re of a statistical bent, though, Chris’ working out will interest you. It’s published in his Investors Chronicle column.
Footnotes:
- If you do sell in May, this is when to buy back.
Comments
Leave a Reply
