7th September 2015
Should you place your bets on the St Leger Day adage as a sure-fire tactic for investment returns? Not always, urges Fidelity Personal Investing.
With the famous St Leger Day race-taking place on Saturday, 2 September, Fidelity Personal Investing analysed the returns for the FTSE All Share between 1 May and 1 September since 1995.
It found positive returns between these dates in 11 out of 21 years meaning investors would have lost money if they had been out of the market, disproving the theory of selling over the summer.
|FTSE ALL SHARE||1995||1996||1997||1998||1999||2000||2001||2002||2003||2004|
|Return (1st May – 1st Sep) %||-14.47||-1.65||-8.98||-17.93|
|Did the adage work?||No||No||No||Yes||Yes||No||Yes||Yes||No||No|
|FTSE ALL SHARE||2005||2006||2007||2008||2009||2010||2011||2012||2013||2014||2015|
|Return (1st May – 1st Sep) %||-0.13||-0.99||-6.51||-2.09||-9.61||-10.15|
|Did the adage work?||No||Yes||Yes||Yes||No||Yes||Yes||No||No||No||Yes|
Tom Stevenson, investment director, Fidelity Personal Investing said: “The St Leger Day adage is a bit of a non-starter. Our figures show it is totally hit and miss since 1995 and investors would have been left out of pocket 11 out of 21 times.”
While this summer may have been a classic Sell in May year. All around the world, investors who sat out the May to September period will be celebrating due to China’s stock market crash and the problems in Greece. Stevenson however warned that in volatile times doing nothing is often the best approach, especially when some of the best days in the market can often follow hot on the heels of the worst days.
The costs of trading in and out of the market should also be taken account of – frequent dealing is costly.
“It is very difficult to foresee whether we are in the early stages of a real bear market, or coming to the end of a short-term correction. Either way, investors need to remember that blind faith in an old adage and being out of the market could mean missing out on strong performing days which can have a significant impact on your returns. Far better to focus on your long-term saving goals and stay invested,” he added.