Ever heard someone whisper, “Sell in May and go away, come back on St Leger Day”? It’s one of those quirky sayings that floats around investment circles, like an old wives’ tale for stockbrokers. I remember my first encounter with it at a dinner party, where a seasoned investor swore by this mantra, claiming September was the magic moment to jump back into the market. But is there any truth to this folklore, or is it just a catchy rhyme that’s stuck around longer than it deserves? Let’s dig into the data, debunk some myths, and figure out whether September is really the time to hit that buy button.
The Myth of Seasonal Investing
The idea of selling in May and buying back in mid-September—specifically around St Leger Day, a famous UK horse racing event—has been around for decades. It’s rooted in the belief that markets slump during the summer and perk up in the fall. Sounds simple enough, right? But as someone who’s spent countless hours poring over market trends, I’ve learned that simplicity in investing often hides a more complex truth.
At its core, this adage suggests that the stock market follows a seasonal rhythm. The theory goes that from May to September, trading slows down as fund managers and investors take vacations, leading to lower liquidity and more volatility. Come September, everyone’s back from the beach, ready to make moves, and the market supposedly gets a boost. But does the data back this up, or are we just chasing shadows?
What the Numbers Say About September
Let’s get to the nitty-gritty. Historical data offers some insights into how markets perform throughout the year. According to research on the UK’s broad-based stock index since the 1960s, the average capital return from January to April is a solid 6.1%. From mid-September to December, it’s a respectable 2.2%. But the period from May to early September? A measly -0.2%. That’s enough to make you think twice about holding through the summer.
Markets often show stronger performance in the first and last four months of the year, with summer months dragging behind.
– Investment analyst
These numbers paint a picture of seasonal patterns, but they’re not the whole story. For instance, since the 1980s, September has earned a reputation as a particularly rough month for stocks. Data from the US shows that a major index has dropped 56% of the time in September, with even worse odds in the first year of a presidency. So, should you be wary of the so-called September effect? Or is it just a statistical blip?
| Time of Year | Average Return | Years Up | Years Down |
| January–April | 6.1% | 43 | 18 |
| May–Early September | -0.2% | 32 | 29 |
| Mid-September–December | 2.2% | 42 | 18 |
The table above shows a clear trend: the start and end of the year tend to be kinder to investors. But here’s the catch—past performance doesn’t guarantee future results. If you’d followed the “Sell in May” rule this year, you might’ve missed out on some serious gains. For example, major UK and US indices climbed 8.6% and 16.6%, respectively, since late April. That’s a reminder that markets don’t always play by the rules.
Why September Gets a Bad Rap
September’s reputation as a volatile month isn’t entirely unfounded. Analysts point to a few reasons why this month can be a rollercoaster. First, there’s the return of institutional investors after summer breaks, which can lead to portfolio rebalancing and sharp price swings. Second, companies often release earnings reports or economic data that can rattle markets. And let’s not forget the psychological factor—investors might be jittery after a summer of uncertainty, ready to sell at the first sign of trouble.
But here’s where I raise an eyebrow. If everyone expects September to be a dud, doesn’t that create opportunities for those willing to go against the grain? Markets are driven by human behavior, and sometimes the herd mentality opens doors for savvy investors. The question is, are you bold enough to step through?
The Perils of Timing the Market
Let’s be real—trying to time the market is like trying to predict the weather in London. You might get it right occasionally, but more often than not, you’re left scrambling for cover. The “Sell in May” strategy sounds appealing because it offers a clear rule to follow, but it’s not foolproof. In fact, it’s only worked perfectly—meaning markets rose in spring, fell in summer, and rose again in fall—about 27% of the time since the 1960s.
More importantly, timing the market comes with hidden costs. Every time you sell and buy back, you’re hit with transaction fees, taxes, and the risk of missing out on unexpected rallies. Research from the past 15 years shows that missing just the 10 best days in the market can slash your annual returns from 7.7% to 4.7%. Miss the top 20 days, and your returns plummet to 2.6%. That’s a brutal reminder that sitting on the sidelines can cost you dearly.
Successful investing is about time in the market, not timing the market.
– Financial advisor
I’ve seen friends get burned trying to outsmart the market. One buddy sold his entire portfolio in May, convinced he’d dodge a summer slump, only to watch stocks soar while he sat in cash. The lesson? Markets are unpredictable, and trying to game them often backfires.
A Smarter Approach to September Investing
So, should you buy in September? My take—and I’m no fortune-teller—is that seasonal patterns are worth noting but shouldn’t dictate your strategy. Instead, focus on the fundamentals: strong companies, diversified portfolios, and a long-term mindset. Here’s how you can approach investing this September without falling for the myths:
- Stick to Your Plan: Don’t let catchy sayings derail your investment goals. If you’re in for the long haul, short-term dips are just noise.
- Look for Bargains: September’s volatility can create buying opportunities, especially in undervalued sectors like small-cap stocks.
- Diversify Wisely: Spread your investments across asset classes to cushion against unexpected swings.
- Stay Informed: Keep an eye on economic indicators and earnings reports, which can move markets in September.
One thing I’ve learned from years of watching markets is that opportunities often hide in plain sight. September might be volatile, but it’s also a time when oversold stocks can offer value. For instance, UK small-cap stocks have been overlooked lately, yet they’re brimming with growth potential if you know where to look.
The Long-Term Game Wins
Here’s the deal: investing isn’t about nailing the perfect entry point. It’s about staying in the game, year after year, through ups and downs. Historical data backs this up. Over the past century, equities have outperformed cash 70% of the time over a two-year period. Stretch that to a decade, and it’s 91%. That’s a compelling case for staying invested, regardless of the calendar.
Think of investing like planting a tree. You don’t dig it up every season to check the roots—you let it grow, water it regularly, and trust it’ll bear fruit over time. September might tempt you to second-guess your strategy, but don’t let it. The best investors I know focus on quality companies, reinvest dividends, and let time do the heavy lifting.
Navigating September’s Volatility
Okay, let’s say you’re still nervous about September’s choppy waters. How do you stay calm when headlines scream about market dips? First, take a deep breath. Volatility is part of the game, and it’s often where the biggest opportunities lie. Here are a few practical steps to keep your cool:
- Review Your Portfolio: Check if your investments align with your risk tolerance and goals.
- Avoid Panic Selling: Dips are often temporary, and selling at a loss locks in your mistakes.
- Consider Dollar-Cost Averaging: Invest a fixed amount regularly to smooth out market fluctuations.
- Focus on Dividends: Stocks with strong dividend yields can provide stability during turbulent times.
Personally, I find comfort in focusing on companies with solid fundamentals—those with strong balance sheets, consistent earnings, and competitive advantages. These are the ones that tend to weather storms and come out stronger.
Busting the September Myth
At the end of the day, the “Sell in May” adage is more folklore than fact. Sure, September can be a bumpy ride, but it’s not a universal truth that markets tank. Some years, it’s a fantastic time to buy; others, not so much. The key is to avoid getting sucked into the hype and stick to a disciplined strategy.
Perhaps the most interesting aspect of this myth is how it reveals our human tendency to seek patterns where none exist. We love simple rules, but investing isn’t that tidy. It’s a mix of art, science, and a little bit of gut instinct. So, this September, don’t let an old saying dictate your moves. Instead, ask yourself: Are my investments aligned with my goals? Am I diversified? And most importantly, am I in it for the long haul?
The stock market is a device for transferring money from the impatient to the patient.
– Legendary investor
As I wrap this up, I can’t help but think about that dinner party where I first heard about St Leger Day. The investor who swore by it was confident, but his portfolio? Not so much. The lesson I took away is that chasing catchy phrases rarely pays off. Instead, build a strategy that’s rooted in logic, patience, and a willingness to ride out the storms. September might test your nerves, but with the right approach, it could also be your chance to shine.
