Are You Ready For The Monday Market Rally?

Can you guess what day tomorrow, the 13 September, is? Let me give you a clue: Doncaster.

Here is another clue: Anthony St Leger. Are we still scratching the back of our heads?

Let me put you out of your misery. Tomorrow is St Leger day. It is the day when three-year-old thoroughbreds compete in the oldest of Britain’s five Classic races.

But the St Leger is also supposed to mean something to us stock market investors. It is the second part of a well-trodden stock market saying. According to the old adage we should “Sell in May” and not come back ‘til St Leger Day”.

If my calendar serves me right, Monday, which is the first trading day after the St Leger, should be the day when stock markets could rally.

So how has the first part of the old stock market ditty fared so far this year?

At the start of May, the Straits Times Index (SGX: ^STI) stood at 3,252 points. Today it is 3,347 points. That is an increase of 95 points, which you would have missed out on if you had “Sold in May”.

You would also have missed out on a 29% increase in Thai Beverage (SGX: Y92) and a 23% jump in ComfortDelGro (SGX: C52). Elsewhere amongst the blue chips, Olam International (SGX: O32) climbed 15% and DBS Group (SGX: D05) rose 7%.

Amongst the midcaps, Singapore Post (SGX: S08) posted a 23% increase and United Engineers (SGX: U04) chalked up a 27% improvement. Raffles Medical Group (SGX: R01) rose a healthy 10% and SMRT (SGX: S53) jumped 25%.

Not every share did well between May and September, though.

In the Straits Times Index, City Developments (SGX: C09) lost 9% and Golden Agri Resources (SGX: E5H) sank 17%. Some midcaps fared badly too. These included Super Group (SGX: S10), which has fallen by a-fifth, and Indofood Agri Resources (SGX: 5JS), which has also lost 20% of its value.

But here’s the thing. The value of shares can rise and fall for a variety of reasons. It can happen at any time too. Sometimes the fall can be justified. At other times, the decline may not only be unwarranted but undeserved and entirely gratuitous.

As private investors we have the opportunity to asses each share on its merit, regardless of the day of the month or the month of the year.

If you see something that looks cheap, don’t spend time checking your calendar. Instead spend the time revisiting your investing thesis and your calculations. If a share looks good, buy it and hold it. If it looks expensive, leave it alone. Or as Peter Lynch once said: “In stocks as in romance, ease of divorce is not a sound basis for commitment.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.