Welcome to September, historically the worst month for stocks

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The market rose slightly Wednesday morning, but the S&P 500 fell about 0.5%, on average, during the month of September, according to Ryan Detrick, chief market strategist at LPL Financial.

Stocks have tended to increase, on average, among others month (apart from a slight decline in February) over the last half century.

September 2020 fulfilled the bad reputation of the month. The S&P 500 fell about 4% this month from last year. Of course, this turned out to be only a brief hit in the explosive post-Covid lock rally.

This September can also be a lousy month (just look at the headlines). And stocks are already at record highs thanks to a seven-month winning streak for the S&P 500

Although corporate profits have risen this year, the S&P 500 continues to trade at a price-to-profit ratio well above the five- and ten-year averages, according to John Butters, a senior profit analyst at FactSet.

The Federal Reserve has a political meeting later this month. Fed Chairman Jerome Powell assured investors last week that the central bank will not reduce or reduce its bond-buying program too soon. But investors will look at all of Powell’s words for new clues about volume reduction.

Covid-19’s concerns have not disappeared either.

While it is true that state and local governments may try to avoid another round of strict closures, including large corporations Google (GOOGL), apple (AAPL) i Facebook (FB) all have delayed their return to office plans until 2022.

Starting a new school year also carries huge risks, especially because children under the age of 12 are not yet eligible to receive vaccines.

September is often lousy, but it doesn’t have to be

Now that we have all the bad news, it’s worth reminding investors that buying and selling according to the calendar month isn’t necessarily a great idea. On the one hand, it is better to stay fully invested to maximize profits rather than trying to time the market.

Sure, your portfolio may be affected along the way, but most investors, even professionals, find it difficult, if not impossible, to perfectly time the top funds and markets.

September doesn’t have to be a tough month for stocks. While stock prices plummeted last September, the S&P 500 concentrated in September 2017, 2018 and 2019.

Mood on Wall Street has improved very quickly

According to data from Bespoke Investment Group, there have now been 15 winning streaks of seven months or more for the S&P 500 since 1945. History shows that stocks are often based on this momentum. Bespoke noted that the winning streaks reached the eighth month 10 times, with an average increase for the S&P 500 of 1.6% a month after a seventh consecutive gain.

Detrick, of LPL, admitted that the fall of September could be avoided again this year, and that the market recovery may continue for a while longer.

“We remain in the field that stocks will continue to rise and investors should use any weakness as an opportunity to add to core equity holdings,” it said in a report.

Detrick noted that after the 14 most recent seven-month winning streak, the S&P 500 has increased its subsequent gains 13fold over the next six months, with an average return of 7.8% over that period.

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