Debunking Some Bunk: Is September Really That Bad a Month?

By: Dave Haviland, Portfolio Manager and Managing Partner, Beaumont Capital

Sometimes our industry grabs on to a concept and cannot let it go. Is September the worst month from a performance standpoint? Does it always/mostly go down? Should one avoid the markets in September? Let’s take a quick look.

Yes, September has been the worst month on average:

Note the average loss over 90 years was 1%, and this appears, according to how it is presented, as the worst month by far. But this average is massively skewed by the large loss sustained in 1931 and the five years around it:

SP Composite 2

In 1931 the S&P 500 did not even exist! The index was introduced in 1957; before this it was a 90-stock index back to 1926. Entire sectors, including the largest today, Technology, did not exist. If less than 80% of today’s S&P 500 constituents were not in the index in 1931, is this information still relevant?

To answer the third question, should one avoid stocks in late August to avoid “September losses”? Well, as the chart below illustrates, if you did this during the last 10 years, your performance would have suffered.

SP500 Index vs SP500 Index without september

So, what can we learn? Averages and generalizations can be quite deceiving. It reminds me of the saying “Liars figure and figures lie.” We just thought a little light on the subject might be helpful.

This article was contributed by Dave Haviland, Portfolio Manager at Beaumont Capital Management, a participant in the ETF Strategist Channel.

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Sources & Disclosures:

Copyright © 2019 Beaumont Capital Management (BCM). All rights reserved.

As with all investments, there are associated inherent risks including loss of principal. An investment cannot be made directly in an index. Index performance is shown on a gross basis. Past performance is no guarantee of future results.

This material is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument, nor should it be construed as financial or investment advice.

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