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.
September has historically been the worst performing month for stocks on average since 1950.
9/11 wasn’t good, neither was September 15, 2008 when Lehman declared bankruptcy.
The expression, “Sell In May, but don’t forget to come back in September,” even arose. Since September typically underperforms compared to the rest of the year, many investors put cash to work this time of year.
Why? Buy low, sell high. If prices drop in September, it can be an optimal time to buy into positions if you anticipate prices to rise in the coming months.
Historical data can help you determine when to make trading decisions. Just remember that the market is unpredictable and past trends do not guarantee similar patterns will occur in the future.
September Is A Bad Month For The Stock Market
Since 1928, studies show that September is actually by far the worst month in the calendar year for performance at ~-1%. Sentiment can turn on a dime, and when markets rally 50%+ into the months of September and October, our risks may be greater than our rewards.
Although the COVID-19 global pandemic changed the world in 2020, stock markets are close to record highs in 2021, and volatility is back.
Even if the markets continue to rally and we aren’t fully invested, we can still win. If 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. That means no clothes, no new gizmos, and 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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Financial Samurai 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.
Excellent timing of this post yesterday! Pretty nasty action today.
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
Good stuff GYI. I think you will do well and sleep easy knowing your money is safe.
David@DINKS Finance says
I’m with you, but even more I’m with Peter Schiff who has been warning us to keep our cash out of U.S. domestic stocks and the American dollar for years.