The Tradition Continues: September, The Worst Month To Be In The Market

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by: Bill Kort

September not available

"Stocks Roll Through Summer's End. But Now Comes September"

(you need a Barron's subscription to view)

It is September again and the perennially negative are out worrying about the calendar.

"To paraphrase Mark Twain, September is a peculiarly dangerous month to speculate in stocks (Twain goes on to posit, to also paraphrase, so is every other month of the year). Since 1950, it has been the worst month of the year for the Dow and the S&P 500, with average respective declines of 0.7% and 0.5%, according to the Stock Trader's Almanac, with similar dismal records for the Nasdaq and the Russell 1000 and 2000 in their shorter histories. September also has seen historic events, like 9/11 and the Lehman Brothers bankruptcy in 2008, which resulted in respective declines in the Dow of 11.1% and 6%, although the worst performing September was in 2002, which saw a 12.4% drop in the dot-com bust bear market." Randall W. Forsyth - Barron's

For good measure, I am surprised Forsyth didn't mention September 1929, the market peak leading into the Great Depression.

Of course, it's not just the calendar that has Forsyth's attention. It's trade negotiations, the Fed/interest rates and the midterm elections. The same holds true for the fine folks at CNBC who also raised the cruel September issue. (September is always a tough month for stocks but this year there are even more hazards).

According to Ed Yardeni (Yardeni Research Inc.), since 1928 the month of September has been the most unprofitable month of the year to own stocks (down an average of 1%). February and May over the same 90-year period have also been losers, down an average of 1/10 of one percent each. On the other hand, the other 8 months of the year have averaged positive results during the 90 years. The main point here is that these data points are all noise and insignificant in the context of a Dow Jones Industrial Average that has risen from its 1929 high of 381.17 to a close last Friday of 25,964.82. All You Had To Do Was Be There! - thru wars, natural disasters, depressions, recessions, etc. - All You Had To Do Was Be Invested In A Diverse Portfolio Of Stocks.

It is truly sad that much of the financial media spends most of its time on the potential negatives associated with owning stocks (bad news sells) and very little on the wealth-creating machine that stock ownership is.

What's your take?