The old stock market adage suggests we should “Sell in May and go away, don’t come back until St Leger’s Day. The St Leger’s Stakes is a horse racing meeting that takes place at Doncaster in mid-September.
The idea harks back to a time when stock trading mostly took place in person on exchange floors, and market participants liked to take an extended summer break.
This notion should be archaic in today’s always-on world of electronic trading and global financial networks. But we have indeed seen a mild market slowdown since mid-May:
This prompted me to look back and see whether I could recognise any seasonal pattern in the performance of my rules-based SIF Folio.
I reckon SIF has fallen between mid-May and mid-September in four of the eight years since the model portfolio’s launch in April 2016.
This even split suggests to me that I can probably dismiss the idea of selling up for the summer as a trading strategy. As usual, I plan to continue following my trading rules. But there’s no doubt that SIF’s ninth summer has begun with a marked sell off.
Since hitting a record high on 20 May, the portfolio has fallen by around 6%. The FTSE All-Share index fell by 3.3% over the same period.
One reason for SIF’s underperformance versus its benchmark index is the share price of portfolio’s largest holding, Zotefoams (LON:ZTF):
This £200m small cap has pulled back sharply after a bout of investor euphoria related to launch plans for its innovative ReZorce beverage carton product. This recyclable product appears to have the potential to replace Liquid Packaging Board (e.g. Tetra Pak), which is near-impossible to recycle efficiently.
Of course, six weeks is a short period in the markets. SIF may regain some of the ground lost in recent weeks by the time the gates open at Doncaster in September.
In the remainder of this piece, I’ll review the portfolio’s half-year performance and summarise the trades I made during the second quarter.
For additional background, you can read my Q1 2024 review here.
SIF H1 2024 performance review
As a quick recap for newer subscribers, the SIF Folio is a rules-based portfolio. I…
