Perhaps the most widely touted piece of advice on investing in the stock market is ‘Sell in May and go away, don’t come back until St Ledger Day,’ referring to the horse race held in Doncaster each September.

The arguments as to whether or not this old adage is a shrewd strategy will continue to rage and over the longer term there is evidence to suggest that the months around the turn of the year offer better average returns.

However, we are currently in a once in a lifetime situation and even in less extreme markets no two years follow exactly the same pattern.

Regardless of the idea of selling simply because we are into the fifth month of the year, it is impossible to ignore the fact that there has been a very sharp rally in the market, with the FTSE 100 moving from 3,500 to 4,500 in a matter of weeks.

The banks have done remarkably well and there are other notable examples of recovery including Kazakhmys, which jumped from a close of 590p on May1 to 767.5p one week later. It is very tempting to sell holdings on the back of such rallies, especially when grim economic data continues to be released.

Stock selection remains important. Some defensive stocks, such as BP and Unilever, have done well in recent weeks and there may well be solid justification for this.

Equally, some price rises have left many people scratching their heads. For instance Carpetright has seen its price roughly double from a low of 311p in December yet the shares now trade on a multiple of over 30 times forecast earnings for the year just ended.

This appears too high given the company has also built up its level of debt in recent years. In our opinion the outlook for retailers does not justify a premium rating.

In summary, there are no guarantees that selling in May will be the right thing to do this year but a large number of companies have seen their share prices move up to levels where we believe that it is sensible to liquidate holdings.

No doubt there will be some interesting opportunities in the not too distant future and although some individual share prices may continue to rise, the broader recovery looks as though it could easily move into reverse over the coming months.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.