There is some well-worn advice that goes 'sell in May and go away'. This piece of folk wisdom holds that markets tend to drop during the summer months as fund managers go on holiday. Like most adages, there is a kernel of common sense to the concept. Fund managers do tend to go on holiday during the summer months. People may be inclined to clear positions ahead of a long break to avoid being caught out by a bad market while away. The theory is plausible enough: some sell in May in anticipation of this holiday effect. And, indeed, the Hong Kong market most recently has conformed perfectly with the theory. As of market close on Friday, the Hang Seng Index has dropped 4 per cent this month. The mood is sour. Trading volumes are thin. The theory seems wonderfully insightful. But, as usual, the facts stand in the way of a good story. In seven of the past 10 years, the Hang Seng Index rose in the period May to September. (See charts.) Moreover, it is not even clear that people take a break from trading over the holiday months. Using Bloomberg data to track the volume of trade for the shares underlying the Hang Seng Index over the past decade, there is no discernible trend for volumes to go up or down in the months of May through August, compared with the yearly average trading turnover. It's 50-50 - volumes are as likely to go up during those months as they are to go down compared with the annual average. People do not 'go away' in May, and they don't even stop trading during the summer months. ''Sell in May and go away' is a myth,' says Steven Sun, head of China equity strategy, HSBC Global Research. 'Statistically, if you adopt this strategy, the winning odds are less than 50 per cent.' The concept is about as useful and predictive as the theory of a January rally, which holds that fund managers are buying stocks in January as they rebalance their portfolios at the start of the year. (This is also known as the 'Santa Claus rally'.) The reality is that if such rallies and sell-offs could be so easily timed, then traders at investment banks and hedge funds would start making massive counter trades. They would buy in October and sell in December, thus locking in the profits of the December price spike. If the markets adhered to calendar-driven patterns, then individuals could easily time their trades to make massive guaranteed profits. The trading would quickly overwhelm the market, erasing any advantage previously seen. The January rally would become a sell-off, selling in May would become a month for buying shares on the cheap. However, for those who believe they can get rich quickly by trading on a simple idea that somehow has eluded professional traders with vastly more resources, they might consider a scheme with a more local flavour: the 'Adam Cheng Effect'. With its tongue firmly in cheek, CLSA put out research in 2004 that picked up on this theory, which linked declines in the Hong Kong market to appearances by actor Adam Cheng Siu-chow on local television. CLSA noted that Hongkongers blamed market crashes on Cheng since he played the role of a reckless trader in The Greed of Man in 1993. The series coincided with a 20 per cent drop in the Hong Kong market. CLSA indeed found that the local market dropped every time that Cheng starred in a television series. The 'Adam Cheng Effect' is about as plausible as 'sell in May' and statistically much more valid.