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September is a Bad Month For Stocks
By JLP | September 6, 2007
After putting yesterday’s The Best and Worst Months for the S&P 500 Index (1926 - 2007) post together, I decided to take a closer look at the month of September. Here’s what I found out.
It’s typically a bad month for stocks - or at least the S&P 500 Index. Take a look at the following graphic which looks at September’s return from 1926 - 2006:
Of the 81 Septembers represented in that graphic, 41 of them were up and 40 were down. The average September return for the entire time period (1926 - 2006) was -.76%. No, it’s not horrible but it is interesting that September is the only month that has a negative average return. Just for fun, I looked at different time spans:
Bottom line: September is a bad month for stocks but not bad enough for most people to be able to take advantage of it by selling in August and buying back in October. Why? Transaction costs. Remember, for these examples I’m using the index itself, not a mutual fund or exchange-traded fund. That means there are no transaction costs factored in my calculations. I’m afraid once you added in any transaction costs, it would negate any arbitrage opportunities.
So, when you look at your 401(k) statement or brokerage statement and you see that you were down in September, remember this post.
Topics: Index Funds, Investing |
