The stock prophecy advising investors to stay out of the market ‘from May to St Leger day' has yet again rung true, according to an online market firm.
According to ADVFN, investors who followed the maxim could have boosted their 2006 profits by 4% on the FTSE 100.
In addition, investors that had done so since 1984 could have improved their profits by more than 30%.
The firm says last year anyone exiting the market at the start of May and staying away until the first trading day after the St. Leger horse race (run on the second Saturday of September) would have avoided the market correction and locked in an extra 3.95% profit.
The study by ADVFN reveals during this period in 2006, the FTSE 100 lost over 231 points, with May itself seeing a 358 point drop.
It says September is the worst performing month of the year with 14 of the last 23 Septembers showing negative returns.
Moreover, the month records the greatest average loss - down 1.07% - followed by June, which loses an average of 0.68%.
At the other end of the spectrum, 19 out of the last 23 Decembers have been positive, with the month seeing a healthy 2.1% increase on average.
Clem Chambers, chief executive officer at ADVFN, says: “The strategy continues to pay off overall, with certain years seeing substantial losses during the summer months and therefore contributing strongly to the 30.44% drop recorded since 1984.
“However, anyone following the advice in 2005 would have missed out on a 514 point (9.56%) rise in the FTSE 100.
“The correction of last May meant that the old city maxim worked particularly well. However, as the market has already experienced a sharp fall this year, it seems less likely that we’ll see a repeat performance during this May to St. Leger period.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Scott Sinclair on 020 7034 2636 or email [email protected].IFAonline
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