To The Moon

Sell in May and go away? How about no, the adage losing relevance on SGX.

We all in sg are being haunted by the famous adage of dumping stocks in the so-called "suay" month of May and probably coming back after October. However, the proverb - Sell in May and go away! - is losing its relevance nowadays, if we look look see see data. In the last one decade, there have been only few instances when $Straits Times Index(STI.SI)$or $FTSE Share(FSTAS.SI)$has delivered negative returns in May.

Although various studies have validated this theory, a majority of market experts say this saying, nowadays, is nowhere close to the reality. According to data from leading equity firm, those index has delivered negative returns in Covid-19 hit 2020 and, prior to that in 2012. On the other eight occasions, the sgx barometer has ended the month on a positive note.

This proverb originated as May has been a bad month for the global equity markets since 1990. However, since the last 10 years, there has not been a correction as there was earlier. Now, everybody knows it, the selling does not happen in the month of May. If May is a bad month, investors sell in April, which makes the performance of May better, hence, traditional data does not work in the current market.

Even if we stretch the period of study to the last 15 years, then the month of May has delivered negative returns only five times. Interestingly, in the all election years (2011, 2016, 2020), sgx has delivered positive performance in the month of May according to the data. Experts said that in-line results in the general elections boosted the morale of the traders.

So as the singlish saying goes, "no need scared one lah"