Market myth

“Sell in May and go away,” the stock market adage has it. It argues that investors should sell in summer months because they are usually the worst performing and hold cash until the St Leger horse race in early September.

It harks back to a time, now long ago, when the Stock Exchange was a homogeneous clique with similar wealth and lifestyles who could take time out for sporting events, such as Wimbledon, the Royal Regatta at Henley and Royal Ascot.

But data analysed by Schroders offers a mixed picture of this famed market superstition. Since 1986 the FTSE 100 has, on average, fallen a fraction between midmay and mid-september – while the FTSE 250 has typically risen. The summer period has also produced more positive years than negative ones. In the 31 years since 1986, 17 summers have produced a positive return. Will hard facts see the demise of this market myth? I doubt it.