Every summer, thousands of investors make the same mistake. Markets become more unpredictable, headlines scream about sudden rises and falls, and many people panic into buying or selling at exactly the wrong time. But according to wealth manager Paul Denley, experienced investors tend to do the opposite. Rather than reacting to every market wobble, they recognise that summer can be one of the noisiest – and least reliable – times of year for investing.
Summer Markets Are Deceptive
Paul Denley, CEO at London-based Oakham Wealth Management, said: "Summer markets can be deceptive. With many professional investors away on holiday, it takes less buying or selling to move prices around. That means markets can look much more dramatic than they really are."
The idea that markets slow down over summer isn't new. The old adage captures this neatly: "Sell in May and go away, come back on St Leger Day." While Mr Denley says investors shouldn't take the phrase literally to come back in mid-September, there is evidence that markets often perform differently during the summer months.
Historical Returns: November to April vs. May to October
He said: "Research has consistently found that shares have historically produced stronger returns between November and April than between May and October. But that doesn't mean investors should rush to sell everything every summer."
Instead, he says wealthy investors understand the difference between market noise and genuine investment opportunities. He added: "They don't let scary headlines force them into making emotional decisions. They focus on the quality of the companies they own, not what the market happens to be doing on a Tuesday afternoon in August."
The Biggest Mistake Ordinary Investors Make
According to Mr Denley, one of the biggest mistakes ordinary investors make is assuming every sharp market move means something important has changed. He said: "In reality, summer price swings often happen because fewer people are trading. Prices can move more sharply, but that doesn't necessarily tell you anything about how healthy those businesses really are."
As holidays come to an end and investors return to work, markets often become driven more by company results and economic news than by quieter summer trading. Mr Denley believes that's why experienced investors rarely overhaul their portfolios during the holiday season.
Patience Beats Panic
He said: "Successful investing isn't about reacting to every headline. It's about sticking to a well-thought-out plan and remembering that short-term market swings are often just noise. The wealthy don't try to outsmart the calendar. They know patience usually beats panic. If nothing has changed about the businesses you own, a volatile summer isn't usually a reason to change your investment strategy."
