As every canny investor in the stock market knows, today is the last day for getting rid of all your stocks and taking a summer holiday - "Sell in May and Go Away". Well, time was I guess when people did take holidays through the summer. That excursion to foreign lands - rudimentary passports requesting safe passage for the holder, no visas, a bank letter of credit in hand before Mr Thomas Cook issued his travellers cheques, and now we use credit cards to pay our expenses. Oh, and I do actually remember the travellers letter of credit in my early days of banking, pushed over my counter by visiting Australians who required to make a withdrawal.
The "sell" advice was sound for the investor in those days, as markets in the summer months became thinly traded, making volatility high at the slightest hint of trouble, and if you were not on the spot to protect your interests you could easily find yourself in serious personal financial difficulties.
I wrote about the old saying in August 2007 (Sell in May and Go Away), and again in June 2009 (Market Madness) - in slightly different articles, but if you say it often enough maybe people start to listen. And this year I see no difference.
We have deals being proposed, IPOs being brought to market particularly in various parts of Asia - but without the tradition of major price rises at the moment of listing - stock markets in trouble because the woes of the world are not yet over, by a long way, currency markets not knowing where they are headed, talk of premature increases in interest rates - although some countries want to do this to head off future inflation, but risk doing so at a time when it might push a few companies over the edge. Oh no; this is neither a time nor a market for the faint-hearted.
Oh sure, the gamblers investors will stay around, believing as always that they - and only they - have the answers, but unless you are able to watch the market daily and use "informed opinion" to make your choices, take a break. Come back renewed, with a resolve to watch your investments even more carefully in the future.
...but look, my last couple of blogs have been pretty negative and this one is heading the same way. I am not a pessimist by nature; cautious - yes, pessimistic no! So I was thinking to myself that if I was going to put something away for a rainy day that I could forget about during the summer, what would I do? I am not in same league as the famous "Stock-pickers of Hong Kong"; I am a notoriously poor (lazy?) investor but whatever I was to do for myself would include keeping an eye on building up some currency deposits in Renminbi because there has to come a time when it revalues. Other currencies with no interest yield do not look excitingly safe over the summer, as those with a yield are likely to be volatile or are already expensive.
If you have to put your money somewhere other than a bank account, put it safe. It may be boring, but at least you should get it back! Even the price of my former employer's stock in Hong Kong (for those of you who don't know - HSBC) looks reasonable at current prices; looking overseas Apple stock for the time being is strong, and with its recent elevation to the rank of number one over Microsoft, and its continuing iPad roll out around the world, it is unlikely to lose momentum during the summer. And people are still going to be using their credit cards. Credit crunch or no credit crunch we live in a plastic world (I must write about that some day!), and shares in Mastercard look like one you could put to one side in a portfolio while you head off for the holidays.
And the "small print" says - As I am not a qualified investment advisor, I am merely telling you what I personally might be having a look at. I wouldn't dream of recommending anything Mr Regulator!
You will have to make up your own minds! As I said, I am not recommending anything more than I am recommending horse number 8 in the 5th race at Happy Valley on 9 June!! Oh, and if you are under 18, don't pay any attention at all to the last comment. Gambling is illegal, and anyway, the horses haven't even been declared for that race yet!
Keep your money safe!!
Not sure what I get more out of your blog .....education or entertainment?
If banking hadn't worked out, you might have been a formidable essayist along the lines of John McPhee (try his expose on Colonsay) or a less-glum Orwell (his treatise on how to make tea is a must-read).
You should be read more widely
Posted by: jeremy | 30 August 2010 at 16:27