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Tuesday, September 8, 2009

September - Worst Month For Stocks?


On this past Labor Day Weekend (2009), I was catching up on some investments reading and came across this article by Vitaliy Katsenelson, a contributing writer at SeekingAlpha.com... here is his take on the historical stock investing record for the month of September:

"October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. -Mark Twain

September 1st is a very strange day for me. In Russia the school year across the whole country started on September 1st. I vividly remember myself as a child on that day throughout my childhood. The sun always shined brighter that day, the cleanliness of my uniform was at the year’s high. It was the custom to bring flowers to teachers on that day thus the school smelled like a botanic garden. Every year I promised myself that I’d be more serious, to smile less and make fewer jokes. Teachers did not like my smile or my jokes, always called me a class clown. Every year I failed at these goals. Thank God!

This introduction has absolutely nothing to do with what I am about to discuss except that September has just begun and it has historically been the worst month of the year for investors. After looking at the data from 1900 to 2008, it is safe to conclude that September historically was the worst month for investors, period. Stock averages and median returns were -1.16% and -0.56%, respectively. Far worse than any other months. In fact, with the exception of June where median returns were down 3 basis points, no other month of the year had negative median returns other than September. In 63 out of 108 years, September brought negative returns to investors, greater than any other month.

It gets worse: Returns in August were greater than 2% average and median returns in September were -2.29% and -1.44%, respectively. I’ll be honest and say I have no idea why this happened or what this September has in store for us. Maybe investors don’t like the end of summer and the first months of fall? Maybe if some of your stocks are hovering close to fair value you sell now? Or maybe if you were looking to buy a stock you wait a little?" (source: seekingalpha.com)

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