“Sell in May and go away” is a famous adage, and in 2006, at least, it appears to be spot on. Cast your mind back to the 7 May. The Dow Jones hit 11577, just 145 points short of its all time peak, and the bulls celebrated. Two days later, it was disarray. Markets plummeted, and people started to talk about the rises of the previous few months, being no more than a temporary blip in the first great bear run of the 21st century.
But, as the rain comes down, and the heady days of summer recede like a long lost dream, up she rises. Yesterday the Dow Jones Industrial average closed as 11575, just a whisker short of the May high. The SP 500 hit a five and a half year high.
All it took was the continuing good news about oil, and the increased likelihood the Fed will drop rates next year, and the market celebrated.
But in the UK, on the other hand, it’s still all rather sad. On May 8, we wrote: “The FTSE 100 still has a long way to go. Okay, at its close of day price on Friday it was at 6091.7, almost 70 points up on the week, but it was higher in the middle of last month.”
And now, four and half months on, the FTSE 100 is languishing at 5798, still almost 100 points down on its high back then. More to the point, while the Dow closed at its all time high of 11,711.98 set on January 14 2000, the FTSE 100 was a thousand points down on the 6990.2 high set on December 30 1999. Who said the millennium bug never happened? It’s just that the bug related to the way companies are valued.
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