Get Rich In September & Buy Nothing!

Valuations Gone Wild

Valuations Gone Wild

I declare September frugality month.  If I’ve learned anything from my 20+ years working, it’s that September and October are generally dicey months for people’s fortunes.  9/11 wasn’t good, neither was last September 15th when Lehman declared bankruptcy.   Since 1928, studies show that September is by far the worst month in the calendar year for performance at minus 0.7%.  Sentiment turns on a dime, and when markets rally 50%+ into the months of September and October, our risks are greater than our rewards.

I don’t see the Dow Jones breaking 9,700, nor do I see the S&P breaking 1,040.  This is it, we’re here and it’s time for a pull back.  At 129X P/E this year for the S&P, earnings are going to have to roar back for valuations to get down to prior peak levels of 40-45X.  It’s always dicey when the markets rally ahead of earnings.  Now firms must execute, and rely on the consumer to leverage up again to drive corporate profits.  Good luck to that!

Even if the markets continue to rally and we aren’t fully invested, we still win because the labor market tightens, wages go up, and job security increases.  That said, I plan to spend money on nothing except for food and shelter this September.  No clothes, no new gizmos, no unnecessary strolls to the mall.  September is austerity month, and I’m going to bank all disposable income away!  Who’s with me?

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Updated on 12/1/2014. Let the bull market continue. Just don’t forget to rebalance.

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Gen Y Investor says

    I’m with you as well. This rally is looking pretty overextended. I rebalanced my 401K / IRA last week and all my free cash is going to my ING account. I’ll use it either for a house down payment or if the market collapses again to buy more at a cheaper level.

    -Gen Y investor

  2. says

    I must say, September is turning out to be an absolutely ROCKING bull market month! Go bull market! I don’t believe you, but I along with millions of Americans are happy you’re back and making us wealthy again.

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