St Swithen’s Day

Sent to clients on 17th July 2024

Dear David

On Sunday evening we saw that football is not coming home after all. The following afternoon at 3pm my mood was lowered again by a light shower of rain. We have all endured an abundance of the wet stuff this summer and it has rained almost every other afternoon; so why was this any different?.  Because Monday was St Swithens Day and as the legend tells we shall have 40 days of rain to follow.

Human beings look for patterns and connections in our world. We enjoy music with a recurring melody or beat, we appreciate geometric shapes and pattern repeats in the flowers and shrubs in our gardens then replicate these in our art and design. So it is no surprise that random observations lead seekers of certainty to try and apply them as rules. As much as I know it isn’t true my mood lifted as I checked the rainfall statistics on my iPad. Football may not be coming home but the sunshine will eventually.

Since markets are a construct of human behaviour they are a good indicator of human emotion as much as our rational behaviour. How often have we looked at the VIX charts as a barometer of investor fear and greed. You and I spend much of our time reading analysts reports based on hours of work scraping data from companies results and economic statistics. It is good to challenge the sirens of St Swithens Day because the adage only lasts as long as more people believe it than doubt it.

I try and avoid writing about politics but couldn’t help noticing that a certain politician is casting one very lucky escape as an act of god. We should all count our blessings but divine intervention  as an election strategy is surprising in the 21st century and slightly concerning. Indeed, with so many elections taking place this year across the world it is a topic we shall write about in more depth.

Much of what I am writing about today relates to short term issues and so it is worth reminding ourselves of the of investing for the longer term. I thought you might like to see the impact of trying to time the market. Imagine that you or I followed another well known adage, sell in May and don’t return to St Leger Day…..The chart below shows the impact of missing out on market rallies on the best trading days. You may recall that a good number of those days occurred in the months of July & August.

Enjoy the sunshine (when it comes)

Max