Switching off in the summer months?

Have you ever heard the phrase “sell in May and go away”? This is a popular phrase in investment circles and implies that there is often a downturn in the stock market during the summer months. This seasonal behaviour is often given as a reason why you should seek to sell all of your holdings in May and then forget about things for the next few months.

When you return in the Autumn, it is to be expected that you will have avoided what otherwise would have been trading losses. Is there any sense to this advice? Almost inevitably, when people come to answer that question they will tend to look at very recent performance levels. If the advice looks to have held good the previous summer, then there are always some who will immediately assume that it is always certain to be correct. By the same token, one great summer might be taken as an indication that it is advice that is best ignored.

There has been some evidence over the years (based upon the Dow Jones Industrial Index) that does suggest that returns are considerably lower during the summer months. Is there any reason for this? Is there strong evidence to suggest why this should be so?

There may be a danger, of course, this has become what is known as a self-fulfilling prophecy. As more and more people withdraw from their holdings during these months of the year, it might be expected that share prices would necessarily fall. There will doubtless be much consideration of whether we see the same being replicated during the coming few months.

What you can certainly expect to see is further discussion of popular trends, phrases and thoughts. That’s what we’re here to bring you.

The meaning of investments

What does investing mean to you? For many, this is a term that they will have been familiar with since childhood. There may have been time spent at home listening to parents or other family members discussing investment decisions.

That’s the type of learning experience that can be surprisingly constructive and useful. Although the imagination may suggest that listening to the odd few pieces of conversation about stock market indices and balance sheets will have had a very limited benefit, that needn’t be so. A child can pick up much, in terms of the language, concepts and even acronyms that are in common use.

But this is not to say that it’s critical to start an investment journey at a young age. It may prove useful to be immersed in a world of business and enterprise in early years, but those who have not received the benefits associated with such knowledge can relax with the understanding that it is possible to play catch up.

Is it possible, however, to learn about investing by using books as a source of information? There are many that would argue that a book can be used to learn about almost any subject and it’s hard to ignore the fact that countless books have been published in this area. When examining titles and summaries, it soon becomes obvious that they cover numerous different topics.

So there is clearly a challenge here to work out where to begin. You know that you want to learn more about investing, but where exactly will you be making a start? Are you planning, for instance, to become a commodities trader? If so, it seems likely that you will be required to pick up some specialist knowledge.

As a starting point, however, it’s undoubtedly important that any budding investor should familiarise themselves with the basic terminology that surrounds finance and investments. Without that thorough grounding, it becomes incredibly difficult to make substantial progress.

Further reading will also prove impossible until you have real confidence in those basic concepts that are under discussion. Good investors haven’t reached the position that they are in via a few lucky decisions (with the possible exception of a few extreme cases). Rather, they have built up the necessary knowledge to enable themselves to make informed decisions. They have done so because there is a recognition that an increased level of knowledge puts them in a much better position. It allows them to take improved decisions on a consistent basis, offering that advantage over other investors.

That may sound like a rather competitive approach and you may feel that you’d rather help others out. It’s important to remember, however, that there is an almost inevitable level of competition to be faced. After all, a successful investor will usually be one who spots opportunities within markets that have been missed by the majority. They are constantly seeking to take advantage of the mistakes of others, looking to build their own positions. On a daily basis, the situation is not quite as extreme as that may sound, but you do need to remember that your own success will rely heavily on an ability to outdo others who are looking to make significant gains.

Where next for Russia?

It’s been more than four weeks since our last post on the subject of growing uncertainty surrounding Russia and the Ukraine. Has anything become clear since?

In political terms, it seems that significant changes have been made. As was previously the case, it seems to us that this is not the place to ponder politics in great detail. However, what we can say is that there are still further changes to come. Until the situation in the Ukraine settles down, it’s hard to imagine a similar stabilisation within Russia’s financial markets.

The repercussions are likely to continue too: there are clearly implications here for neighbouring states, together with international relations. With accounts being frozen and threats being made from all sides, it seems unlikely that the situation will settle down any time soon.

Are we any further forward as a result? An observation here would be that markets rarely react well to such elements of uncertainty. This doesn’t mean that those investors with an ear to the ground will find it impossible to find value within such markets, but it undoubtedly means that we can expect to see increased levels of caution.

When it comes to our own focus on the approach taken by Nevsky Capital in such circumstances, there’s a desire here to learn from the tactics of professional investors. Many private investors are also likely to be following their lead, seeking to get an insight into what the future is likely to hold.

For Russia, it’s clear that many more changes can be expected. Judging the nature of those changes remains difficult and it may take bravery to step in to some investment opportunities right now. What we can say with real certainty, however, is that financial and political analysts will continue to monitor ongoing events. The next few months and years will undoubtedly provide some interesting news stories.

Sources of financial news

Most investors want to have reliable, regularly updated sources of information. When considering investing in global markets, it’s not always easy to get access to such information.

There are certainly plenty of websites based in the UK and the US that can come to the rescue. In some cases, it’s necessary to pay a subscription in order to get access to them. Here, we take a look at some popular choices.

Financial News

This is an online publication that offers a reasonable depth of information, although it may not be suited to absolute beginners in the world of investments.

Key topics covered on a regular basis include asset management, investment banking, private equity, trading and technology.

There are also regular special reports, often including interviews with leading names in the world of finance.

BBC Business

As might be expected, the BBC Business website offers good quality explanations of the latest stories, although may sometimes lack the depth of specialist publications.

The large team of journalists available to the BBC does mean, however, that there is good coverage of most financial topics.

Reuters

A key source of information for many, offering quick responses to the latest news stories. As with BBC coverage, investors may feel that there is a lack of depth when dealing with some issues. That’s to be expected, given that the news organisations are often attempting to cover a broad range of subjects.

Reuters news feeds are also used by a number of other organisations. Even if you don’t visit the Reuters website on a regular basis, this means that it’s likely that you will be exposed to their journalism.

The Economist

For those familiar with the print version of this magazine, The Economist online provides the same high quality reporting and insight.

This is, however, provided on a subscription-only basis. At the present time of writing, an introductory offer means that it’s possible to subscribe at a rate of £1 per week.

Financial Times

Content at the FT.com website is also hidden behind a paywall, meaning that you’ll need to pay for access, in order to take a closer look at the stories that are listed online.

A premium subscription is currently priced at £6.79 per week, allowing unlimited access to the website, via desktop, mobile and tablet devices. You will also receive an exclusive letter from the editor, together with ePaper access.

With slightly less features available to you, the standard subscription (currently priced at £5.19 per week) is a cheaper option.

When it comes to investments, it’s important to have information at your finger-tips. With enough knowledge in place, you’ll be in a good position to make better investment decisions.

But how reliable is the information that you currently have? Could it be the right time to seek out alternative sources of information?