The All-Share index has fallen below its 10-month moving average, posing the question: should we now sell equities?
The case for doing so was first made by Mebane Faber of Cambria Investment Management in 2006. He showed that a simple rule of buying US shares when the S&P was above its 10-month average and selling when it was below it would have given investors higher returns and less volatility than simply holding shares since 1901.
My table shows how the same rule would have performed in the UK recently. I’m assuming that one applied the rule at the end of each month.