There is an old financial adage to “sell in May and go away”. According to it, investors are better off divesting their stocks and holding cash in May and wait to reinvest in November.
This seasonal pattern is based on the premise that the six “summer” months of May through October typically register lower gains than the six “winter” months of November through April.
The theory of selling in May is believed to have originated in England with the continuation to the maxim being “come back on St Legers Day”. It refers to the St. Leger’s Stakes which was one of the most prestigious horse races held in Doncaster every September.
To seek respite from the heat, those at the upper echelons of society, who tend to invest in the market, can afford to be away during the summer vacation months. A host of fall events which includes the St. Leger’s Stakes horse race will enticingly lure them back in fall when cooler temperatures