Sell in May, slugs and gold

Crack out the bunting! The sun is out, the FTSE is flying and we're out of a technical recession, with the news that the economy grew by 0.6% in the first three months of the year. In other news this week, the Monetary Policy Committee voted to keep interest rates steady at 5.25%, but interestingly 2 of the 9 Big Poobahs voted for a decrease, amidst hints that lower rates are on the horizon. Some are now tipping lower rates from June, others think this could be as late as September.

The mid-week excitement continued as I was placed under house arrest by a slug. I will explain all at the end… but now to markets.

Sell in May...?

There's an old saying which gets trotted out at this time of year. “Sell in May and go away, don’t come back until St Leger’s Day.” Historically, stock markets have done notably better on average in the winter than in the summer, and the old adage came from a belief you should sell all your shares in May and buy them back in October when things start to tick up again.

The saying is centuries old and came from the time when aristocrats, bankers and merchants would leave the City for the summer and only come back for the annual St Leger’s Day Stakes – a famous horse race in September.

If we look at seasonal stock market performance, there is data to back this belief up. Why does this happen? Most put it down to the seasonal impact of things such as Hallowe’en, Thanksgiving, Black Friday, Cyber Monday, Christmas, the New Year and Valentine’s Day. Along with annual bonuses and pay increases in January. And the end of the tax year in April. I also suspect more than half of Wall Street are swanning around the Hamptons in Ralph Lauren in August.

Here comes the FTSE

Despite this lovely history lesson, the naughty old FTSE 100 hasn’t got the memo and is having a busy month, shaking off the dust of recent years and climbing up the charts. In April, although the best-selling retail funds were largely still global share funds and tech funds, the iShares FTSE 100 Exchange Traded Fund got a look in, as more investors buy into the main UK index. This ETF is up over 8% in the last 3 months, outpacing its US equivalent - the iShares Core S&P 500 - by about 2% over this time.

This timing is convenient given the Chancellor’s recent announcement about plans for the British ISA. This piece from BlackRock shares more on what is proposed along with a view on how cheap UK shares are compared to global peers.

Gold is also shiny right now and the iShares Physical Gold Exchange Traded Commodity is also popular, hitting the best-selling ETF lists on all platforms we cover. All that glitters has been gold over the last 3 months, with this fund up 14%. Exchange Traded Commodities (ETCs) are convenient ways for us to get exposure to the movements in price of commodities including precious metals, oil, wheat, coffee and livestock, without needing to keep a load of gold, oil or a cow in the front hallway.

The examples of the FTSE and gold reinforce why I wouldn’t ever suggest we sell in May and go away, like Lord Chinless Wonder of old! You just never know what is going to happen, so I think timing the market is generally a mug’s game.

From gold to slugs

And now to my house arrest. I recently moved house and have a fairly pointless, large 10 foot high electric gate which theoretically automatically opens during the day and is controlled by a zapper. Except it didn’t feel like working on Tuesday evening. So I had to grab a neighbour’s wheelie bin and hop up on the 12 foot wall and jump down the other side to get home.

After much faff – and 24 hours of being locked into the house and garden – the nice electrician who came out to help me found the problem. A bloody slug had been slobbering away on one of the control boxes, and its fried remains were preventing the infrared thingies from transmitting. For those of you looking for a novel excuse to miss a meeting, I offer you – the slug!

Have a lovely weekend everyone. And wishing all those doing GCSEs the best of luck.

Holly

Want to get Holly's weekly blog straight to your inbox?

Sign up for no-nonsense tips, tricks and food for thought every Friday!

SIGN UP

I would like to hear from you about products, events, general marketing and other things from Boring Money – including personalised content and ads - but please try not to make them as boring as everything else in finance!

Already have an account? Login