According to one of the most famous market adages, the stars are aligning for the market-beating strategy of “Sell in May and go away, come back on St Leger's day”.
Deutsche Bank has analysed the success of this old trope in what is the second of a new 'myth buster' series of notes.
"If you invested in the strategy in 1987, it would theoretically have outperformed a buy-and-hold strategy quite significantly," said strategist Maximilian Uleer, with a 9.1% annualized performance versus only 7.4% for buy and hold.
But he adds that "we are not big believers in horoscopes, and we would certainly not invest our money based on it".
The phrase was first coined in the late 1700s in London, long before near-24-hour digital trading and a time when your broker might have vacated their normal spot in town to spend their summers in the country.
Deutsche's strategists tested various versions of the 'sell in May' strategy to give this approach the benefit of the doubt, including hypothetical selling at the end of April and at the end of May, along with reinvesting at the end of August and at the end of September.
"Selling at the end of May and buying at the end of September yielded the best results," he says, assuming an investment in the Stoxx Europe 600 net total return index from the end of September until the end of May, and then switching to cash (without interest) from the end of May until the end of September.
But Uleer said the team's key view on is "the chances of this strategy to outperform Buy and Hold are the same as tossing a coin".
The cumulative performance difference would add up to 1,142%, but he noted that this was misleading as in 23 of 37 years, the strategy would have underperformed a simple buy-and-hold strategy.