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Remember to come back in september!

Written by Nik Rainer | 5 minutes
FRI 30-08-2019
Did you hold your shares this summer or have you followed the old stock market wisdom - "Sell in may and go away"?
The group of investors that opted for the latter was clearly a buzz this summer, as the AEX that was still above 570 points before the summer fell by around five percent between the end of April and the end of August.
Although there were also winners on the Damrak, the majority of the AEX shares, and in particular the financials, clearly stepped back. The leading indices in the US also had to surrender, even though there was a slight recovery in the second half of August.

Summer rally

Nevertheless, historical data shows that the financial markets generally do not do well at all during the summer months. On the contrary. Data for the period 1978-2017 shows that the S&P 500 managed to achieve an average return of 3.1 percent in the period from June to August in forty years.

The value of your investment may fluctuate. Results achieved in the past offer no guarantee for the future.

The same research even shows that those who just kept their shares for the past forty years achieved a total return of around 87%, compared to "only" 65% for the group of investors who opted for cash in the summer.

Perhaps next year the shares will continue in the summer months. Or sell it again? It remains a difficult decision, because historical returns are still - see also this year - no guarantee for the future.

Volatile stock market. Buying or selling?

The view of the summer also brings us back to the second part of the saying: "But remember to be back in September".
A new, interesting second half of the investor year is imminent, with undoubtedly exciting company news and new developments around the Brexit and the trade dispute between China and the United States. All things that could influence the stock markets positively but also further negatively.

What to do as an investor? There may be groups of investors who still, or still, opt for a safe cash position in the coming months. And there are others who see opportunities to invest extra. Difficult choices now that the stock market is quite mobile.

No buying or selling stress: invest periodically

Choosing the right time to get in cheaply or to avoid a correction remains difficult for private investors to time. Certainly when it appears that stuckers often do better than regular switchers. Something to be nervous and uncertain about as an investor. That is also the main reason why we at BinckBank would also like to point out the benefits of periodic investing.

By investing a fixed amount every month in, for example, well-spread ETFs, you no longer have to time the best time yourself and your money is invested at a nice average price (at low prices you get more pieces and at high prices less). Periodic investing can be beneficial, especially for long-term investors, as historical data indicate positive returns over longer investment periods.
In addition, you are less sensitive to the effects of stock market fluctuations and you can eventually build up a nice - extra - power step by step.

Investing involves risks. Your investment may be worth less.


Nik Rainer

Nik joined BinckBank in 2016 as part of the team responsible for rolling out the Saxo Bank international service. Nik has held positions at various banking institutions such as Hambros Merchant Bank, Standard Chartered Bank and Morgan Stanley and brings his solid financial background to the role. Working with the development of new client services and relationship management, Nik also contributes to local publications and forums.

The information in this article should not be interpreted as individual investment advice.  Although BinckBank compiles and maintains these pages from reliable sources, BinckBank cannot guarantee that the information is accurate, complete and up-to-date. Any information used from this article without prior verification or advice, is at your own risk.  We advise that you only invest in products that fit your knowledge and experience and do not invest in financial instruments where you do not understand the risks. 

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