SELL in May and go away don't come back until St Leger day goes the old investment maxim. The St Leger was run last Saturday, signalling the end of summer diversions for the City and heralding the return of private investors, who are busily scrutinising their portfolios. While only the foolish predict index moves, I feel that this autumn is going to be a strong one.
We have experienced a nasty correction and it's well and truly out of the way now. This September is quite likely to be a benign one; particularly after the spring/summer correction pre-slumped the market and in spite of the fact that September is historically the worst performing month for the FTSE 100 and the Dow. In fact, it is the only negative month, on average, in the US and one of only three negative months in the UK markets. This phenomenon is probably caused by pre-empting October, which most people associate with the Wall Street crash, Black Monday, Asian contagion and Russian default.
October is indeed the month for crashes, but crashes often bounce straight back, so that all-in-all it is not a negative month on average in the US. ADVFN's number crunching highlights that October shouldn't be feared in the UK either. Over the last 21 years the FTSE has dropped just 0.25 per cent on average during this month. However, if the effects of Black Monday in 1987, which saw the index plummeting 29.14 per cent in a month, are excluded, October would see an average rise of 0.89 per cent. In any case, a diversified portfolio will help defend investors from crashes and other negative market anomalies. The signs are promising for a solid autumn-winter period, with the Dow industrial average potentially breaking its all-time high sometime between now and Easter. It could easily do it in a week, but is more likely to take a lot longer. In any case, the last quarter of the year is generally a good time to get into the markets as this is when the FTSE tends to perform at its best - receiving a 4.18 per cent lift on average.
Unless something unexpected and nasty happens, we will get a good solid rally up to Christmas - December is the best month for the FTSE with the index climbing, on average, 2.03 per cent during the festive season - as the market becomes comfortable that we are at, or very nearly at, the top of the inflation interest rate cycle and that in time both will begin to fall back. This will levitate the markets and, if the cycle has turned, buoy them up for a few years to come.
It is faintly irritating to hear good things are on the way and people always take more notice of dire warning and consider prophesies of doom as more wise, but the markets are looking in good shape and as such you should be bullish.
Any fool can make money in a bull market, so we should all make the most of it.
• Clem Chambers is chief executive officer of European stocks and shares website ADVFN ( www.advfn.com