Are you in danger of being misled in investing?

By Howard Coleman

Every year in May, commentators on TV advise “sell in May and go away”. Clients who blindly took their advice would be rueing the mistake of listening to someone who quotes their predecessors without engaging their brain.

The comment “sell in May and go away” was coined by brokers on Wall St long before the days of mobile phones and the internet. With late May being the start of the summer holidays for students, they wished to take relaxing holidays with their families without being sought for advice by clients wishing to buy and sell. Hence the advice to clients “sell in May and go away”.

Over time, someone noticed that in a couple of consecutive years, the share market dropped between late May and early September. Of course this was simply a random event and in other periods the market rose between late May and early September. But this helped cement the myth and brokers could take their holidays in peace.

This year, not for the first time and nor I expect the last, this old saw would have cost gullible clients a lot of money in lost profits, missed dividends and potential capital gains taxes. Warren Buffett, Berkshire Hathaway and our members would have taken no notice of the commentators. But the brokers on Wall St would have enjoyed a more peaceful holiday than without giving this advice. So despite it being of no or even negative value, we can be sure the same advice will again be trotted out next May.

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This article contains general investment advice only (under AFSL 334339). Authorised by Mark Moreland.