"Return on St Leger Day": Is September a good time to buy?

Investors have a saying that goes, "Sell in May and go away, don't come back until St Leger Day"

Does it have any truth to it?

Investors can be surprisingly superstitious for a group of people who rely heavily on economic forecasts, company accounts, and mathematical ratios when making decisions.

The old adage about selling in May and then going back to the market on St. Leger Day, a horse racing festival that takes place over four days in September, is probably familiar to you.

It's half-true and half-nonsense, like most superstitions. For instance, it would have been a poor idea to sell in May this year because markets had recovered well from the Liberation Day sell-off in April.

As of yesterday's market close (8 September), the FTSE 100 and the FTSE All-Share had increased by about 81.6 percent since 30 April. The stock market is up 16.6%. Despite posting more modest gains, the Euro Stoxx 50 is still up 3 points 9 percent during this time frame.

The first and last four months of the year typically see the best market performance, with a period of less promising performance in between, according to historical data.

The average capital return of the UK stock market between January 1 and April 30 was 6.1 percent, according to data from investment platform AJ Bell, which has been focused on the broad-based FTSE All-Share Index since 1965. It was 2.2 percent from September 11 (St. Leger Day) to December 31. Less than 0.2 percent has been the in-between period.

The fact that fund managers are choosing the beach over the office during this transitional period may be one reason for the lower trading activity. Increased price volatility could result from the reduction in liquidity.

In September, how frequently has Buy worked?

At times, only one or two of the pattern's components remain intact. According to data from AJ Bell UK, it has only operated flawlessly about 27% of the time over the previous 60 years.

"Only 16 occasions since 1965 has the FTSE All-Share risen through to the end of April, fallen through to mid-September, and then gained until the end of a year," Russ Mould, investment director at AJ Bell, stated.

Nevertheless, when you examine each era separately, there does appear to be some truth to it. In 43 of the years since 1965, markets have increased between January and April, and in 42 of those years, they have increased between September and December. In contrast, they have only risen between May and September in 32 years.

Source: LSEG Refinitiv data and AJ Bell. data as of September 5th, when the market closed.

Certain months have typically been better or worse than others during these times. Even though September falls within one of the more buoyant thirds of the year, it is occasionally characterized as a volatile month.

According to AJ Bell, September is the worst month when examining the average monthly change in the FTSE 100 since 1984, the year the index was introduced.

A similar pattern is observed in the United States, according to Tom Stevenson, an investment director at Fidelity International. He writes: "The S&P 500 has dropped 56% of the time in September, according to Bank of America. During the first year of a presidency, the average fall is slightly higher and the odds are slightly worse.

This puts a bit of a wrench in the superstitious investor's plans. Should they take the old proverb about buying on St. Leger Day seriously, pay attention to cautions about the "September effect," or (ideally) disregard both of these hoaxes and take a prudent, long-term approach?

Is September a good time to buy?

Investors should ignore short-term noise and concentrate on long-term fundamentals, even though broad seasonal patterns can be found.

Keep in mind that time in the market, not timing, is more important for long-term success in investing. You lose out on the chance for possible growth when you trade in and out of holdings, leaving your money sitting on the sidelines and incurring needless expenses.

According to the FTSE All-Share Index, Fidelity International examined the performance of the UK markets over the previous 15 years earlier this year (May 2025). It was discovered that investors' annualized returns were reduced by about a third, from 77 percent to 47 percent, when they missed the top ten days of market performance.

The annualized performance was reduced to 2 point 6 percent, or more than two-thirds, when the best 20 days of market performance were missed. Investors suffered annualized losses of over 1% as a result of missing the 40 best days.

You can never predict when the best times to invest will come around. They frequently follow a sell-off, as was the case following the Liberation Day crash. For the long term, staying invested is usually a better course of action than selling out and hoarding large sums of money.

Based on a two-year holding period, Barclays data spanning the previous 120 years indicates that, despite the volatility of equity markets, stocks have outperformed cash 70% of the time. It increases to 91 percent of the time if the holding period is extended to 10 years.