This phrase will be known to many investors. It originates from the times when most City stock traders were from aristocratic or at least rich backgrounds and so they left the City for the ‘house in the country’ in May and came back in September – the ‘come back on St Leger’s day’ second part of the phrase.
As someone who spends a lot of free time reading classic books, I have always been fascinated by the way writers, sometimes themselves investors (or the offspring of unsuccessful investors!), recorded investor behaviour. Anthony Trollope is a very interesting source on this subject especially in his bitter satire “The Way We Live Now”.
Readers of this blog will know I am utterly convinced from years of observation and quite a bit of reading that human behaviour is at least to some extent predictable and undoubtedly drives share and fund prices as much as basic economic theory.
So, as the evidence is that on average the suggested course of action suggested would give better results in more years than not, I am not going to dismiss the saying as trite nonsense. It may well reflect the general momentum of market trading. On the other hand for the last couple of years it would have been a bad move to sell out of markets in April or May.
Taking into account where we are now, a thinking process I constantly stress needs to be applied when making investment decisions, the odds must be on banking at least some profits or keeping cash on the side ready to invest later. My monthly reviews for subscribers will make more specific observations. I would think there are plenty of reasons for taking profits from portfolios incrementally anyway, given the high levels of political risk around at present.
Of course, investors in funds can expect those fund managers who have the scope to hold cash or near cash in their portfolios to make the call for them.
Other longer pieces on the site discuss the merits of cash as an asset and of course the need to take a long term view.
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