Alternative investments – sell in May, but what do you buy with it?

Saturday, 05 May 2007 12:00

An old stock market adage runs “sell in May and go away, don’t come back until St Leger’s Day [September 10th]”.

This reflects the typically slow summer months on the markets, as school holidays, a closed parliament, and sunshine combine to keep city types away from the trading floor and on the beach.

But, while selling stocks might prove popular, the question remains: What should you do with your money once you have sold?

There are a number of alternative investment vehicles available for anyone wanting to move away from the markets without sacrificing potential growth, and with the Financial Services Authority (FSA) making moves to regulate the alternative investment industry this option is set to become safer than ever for members of the public to dabble in.

There is a ready market for everything from art to wine, with more contemporary collectibles such as comics and classic cars also able to be turned into a tidy profit.

And for more traditional investors options such as buy-to-let property, commercial property and hedge funds are another way to make money without investing in stocks and shares or putting money into savings accounts.

Property remains the top choice for people putting money in something other than stocks, shares and savings – with people more likely to invest in their own homes and buy-to-let properties than anything else when going for medium-term growth (full story).

Great returns can also be found by people investing in stamps, with the average precious stamp collection jumping 52 per cent in value between 2000 and 2005 (full story).

Other options Britons are turning to include classic cars, with more than one Briton in three (34 per cent) thinking about putting money into a classic car (full story) and wine (full story).

But the real trend in recent years is for cheaper collectibles.

“The boom in online auction sites like eBay means it’s easier to build up a big collection. eBay has almost 10,000 listings under the ‘collectable’ category,” said Phil Stevens, head of non-standard household insurance at Quoteline Direct.

“Toys have been going for record prices over the last decade. Even if they’re just a few years old, they can be worth a lot of money if they’re sought after.”

And it is not just toys that are catching people’s attention.

Comics have become the top alternative investment option (full story) and almost one person in three is looking at the possibility of investing in celebrity memorabilia (full story).

Of course, as May rolls round for another year and Britons increasingly turn from the markets, the ultimate alternative investment might be in the FTSE.

John Bearman of Santander Asset Management UK has real doubts over whether “selling in May” is a good idea at all.

“The theory is that markets are more likely to lose ground over the summer months when traders and brokers loosen their ties and take time out to sip Pimms on the riverbank at Henley, eat strawberries at Wimbledon and gently roast themselves on Mediterranean beaches,” he explained.

“Only in September, when the major market players are back at their desks will activity levels begin to pick up again.”

But this picture might well be past its sell-by date.

“The idea of a long lazy summer away from the office may be alluring but it is not something many of today’s City workers would recognise. Markets are global, highly competitive and pay no heed to the English summer social season. A company which relaxes anything other than its dress code over the summer months is not going to succeed.”

He pointed out while markets dropped in 1998, 2001 and 2002, in 2003, 2004 and 2005 returns were good and last year anyone who left the market in May would have missed the opportunity to buy at the market bottom during June, after a fall of ten per cent.

“The St Legers Day adage is a quaint piece of Olde England, rolled out at on an annual basis in the financial pages of newspapers but for investors it is as useful as a clotted cream tea.”

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