After the market’s strong start to the year, it may be tempting to abide by the adage to ‘Sell in May and go away, buy again St Leger Day’ – a date linked to the famous horse festival in September bearing the same name. It dates back to a time when travel was slow and information intermittent, so City investors would take long summer holidays and the market would essentially close.
But the evidence suggests this particular adage does not stand up to scrutiny. As such, long-term investors should not be distracted from adhering to the fundamental principle that ‘time in the market is better than timing the market’ – as trying to time market swings has tended to be a fool’s errand. Such an errand can also reduce an investor’s ability to benefit from what is the major contributor to total returns – reinvested dividends.
Yet in adhering to this investment principle, investors need to recognise the importance of ensuring portfolios consist of the right balance of asset classes to best achieve their remit. Appropriate diversification is essential as an investment journey progresses and financial goals are approached. This discipline certainly guides the nine real investment trust portfolios run in real time by our company on the website www.johnbaronportfolios.co.uk.