“Sell in May and go away, don’t come back till St. Leger”s day”
When trading shares was a manual process, the above investment practice undoubtedly held true 70% of the time. However in this current fast-paced, algorithmic trading world, the results obtained have become no better than 50/50. Effectively the saying is today about as true as any other old wives tale. We do however continue to make higher returns over the Winter months usually. The beginning of 2025 saw early impressive returns eliminated as Donald Trump sent the markets into a tailspin with his tariff announcements. As this behaviour doesn’t occur every year, don’t expect this year to follow traditional patterns.
Politics and Investment
In my previous blog “The stroke of a pen” I quoted Eoin Treacy who correctly deduced that “The benefit of using tariffs for the purpose of manipulating the bond market is they can be turned off with the stroke of a pen.” March was not likely to bring a market meltdown like the structural problems of the Great Financial Crisis of 2009 did. The Trump tariffs have been raised and lowered in successive waves faster than a lady of the night’s underwear. (Toned down analogy to prevent blushes) Through pronouncement after pronouncement on Truth Social, the rattle of a keyboard rather than the stroke of a pen, which have seen the markets, and also currency rise and fall quickly in response. Trying to respond by buying or selling is a fools endeavour. I believe it is important to not let our political affiliations lead our investment decisions. Many Americans sold down and ran to safety, because they were card carrying Democrats. They have missed out on the best May performance of the US markets since the release of “Pretty Woman” in 1990. Our portfolios too have surged, held back only slightly, by a weakening Dollar. I can see the Dollar weakening further, but I cannot see the Pound strengthening much further. UK debt problems look set to accelerate as the amount collected in taxes continues to fall, making investment into the UK fall.
Continue reading “May The Force Be With You”