Sell in May and come back on St Ledger day - Part 2

Anyone who followed the old market maxim “Sell In May” will be cursing, as equity, bond and commodity markets generally look and feel bouncy after a summer of gains.

Anyone with money in property funds may grimace a little, except for wheat, whose dive to ten-year-lows is unlikely to rattle too many portfolios, The only real fallers of note over the summer were the pound and UK interest rates.

That begs the question of what is coming next, as the full adage reads “Sell in May and come back again on St. Leger day”. Saturday 10 September was St. Leger day this year, as Doncaster’s Town Moor track hosted the final ‘Classic’ horse race of the Flat season, so maybe now is the time to assess the strategy as we prepare for the run-in to the year end.

As of the close on Friday 9th September, the FTSE All-Share had risen by 8.57% since 1 May. Despite the siren charms of the ‘Sell in May’ saying that represented the twenty-seventh time since 1965 (out of 52) that the benchmark had actually gained over the summer months.

Looking back over the prior 26 advances, the All-Share then rose 18 times and fell just eight times between the running of the St. Leger and the end of the year – although the average increase in the end was just 1.9% over those 26 cases, with the best performance an 11.3% gain in 1993 and the worst 1987’s juddering 24.5% loss.

This goes to show there are no certainties in markets, just as there are no such things in horse racing either.


Source: AJ Bell Investcentre