Sunday, June 13, 2004
Investment slogans, so popular in financial media, should be accompanied with a public wealth warning. These insidious catchphrases fool the inexperienced into believing investing is either a glamourous and extremely sophisticated endeavour or the fiscal equivalent of sawing a woman in half - once armed with the magic secret, success is simplicity itself. Investment is not like either of these, or indeed any other pursuit. You need a strong but flexible grip of the nuances. Nothing in this is infallible, including these dollops of dogma.
How are we supposed to reconcile enemy number one sell in May with never sell Shell? Or no-one ever went broke taking a profit with buy it right and hold tight? These soundbites peddled as panacea are left knock-kneed and wheezing after a logic MOT. Sell in May started life as Sell in May, stay away, come back on St. Leger day. If any reader can point out just how investment returns are affected by the day on which a
horse race is scheduled and also how you might re-enter the market on a Saturday, when the exchange is closed, I'd be very happy to hear all about it via comment or email.
These abberrations survive not necessarily because they are valid but because they are easy on the ear and the journalist's twenty pence biro. Never sell Shell is a pretty pun that allows the brain to be disengaged for a moment or two. At times when a shareholding is showing a loss buy it right and hold tight becomes an investment motto, allowing the investor to convince himself he did buy right and as a righteous investor will now hold tight for the pay dirt that awaits the deserving.
There is usually no difference in the quality of reason in an exact reversal of these supposed tenets of shareholding. Why should we be buying in May rather than selling? Why never sell Shell, how about never buy MFI?
As in the previous blog, the investor should himself question any comment or source's motivations, similarly any recommended strategy or ethos. Where is the supporting evidence? Is this consistent with logic and common sense? Last year, the UK stock market produced positive returns between May and the St. Leger. The in-depth articles on the historical success of the cliche have been absent in 2004 and the hacks were robbed of the chance to produce an article that has previously written itself. Shame that, you'll have to put up with me instead.
The Artful Dodger
How are we supposed to reconcile enemy number one sell in May with never sell Shell? Or no-one ever went broke taking a profit with buy it right and hold tight? These soundbites peddled as panacea are left knock-kneed and wheezing after a logic MOT. Sell in May started life as Sell in May, stay away, come back on St. Leger day. If any reader can point out just how investment returns are affected by the day on which a
horse race is scheduled and also how you might re-enter the market on a Saturday, when the exchange is closed, I'd be very happy to hear all about it via comment or email.
These abberrations survive not necessarily because they are valid but because they are easy on the ear and the journalist's twenty pence biro. Never sell Shell is a pretty pun that allows the brain to be disengaged for a moment or two. At times when a shareholding is showing a loss buy it right and hold tight becomes an investment motto, allowing the investor to convince himself he did buy right and as a righteous investor will now hold tight for the pay dirt that awaits the deserving.
There is usually no difference in the quality of reason in an exact reversal of these supposed tenets of shareholding. Why should we be buying in May rather than selling? Why never sell Shell, how about never buy MFI?
As in the previous blog, the investor should himself question any comment or source's motivations, similarly any recommended strategy or ethos. Where is the supporting evidence? Is this consistent with logic and common sense? Last year, the UK stock market produced positive returns between May and the St. Leger. The in-depth articles on the historical success of the cliche have been absent in 2004 and the hacks were robbed of the chance to produce an article that has previously written itself. Shame that, you'll have to put up with me instead.
The Artful Dodger
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