September Is The S&P 500’s Worst Performing Month!

Whereas August was a shaky month for traders, it might simply be a warmup for September. Historically, that ninth month, which is just some days away, has been the very worst month during which to spend money on shares, in keeping with a current knowledge evaluation from New York-based analytics firm CFRA.

“We remind traders to arrange for the potential for disappointing outcomes for boht the S&P 500 and Nasdaq within the month forward,” the report states.

On common since 1945, the S&P 500 falls 56% of the time in September, making it the one month which is extra prone to see a drop than an advance of any sort, CFRA analysis states. The typical S&P 500 return is minus 0.73%, the worst of any month.

That additionally means the SPDR S&P 500 exchange-traded fund, which tracks the S&P 500 index, would fall in tandem additionally.

Likewise the Nasdaq composite has a tricky time in September. The index rallied solely 52% of the time over the interval beginning January 1, 1971, the bottom of any month, and the typical return of minus 0.86%, once more the worst performing month. once more the information is from CFRA.

Its not all unhealthy. CFRA says there’ll seemingly be potential sub sectors of energy and weak point. One of the best performing sub industries within the S&P 1500 are Footware, Family merchandise, and Life & Well being Insurance coverage, in keeping with the evaluation. They outperformed the S&P 1500 1500 index 71%, 71% and 68% % of the time, respectively, the analysis word says.

The report highlights present producer Crocs
CROX
Inc. (CROX,) family product firm Colgate-Palmolive
CL
Firm (CL) and insurance coverage agency MetLife
MET
(MET) as a few of the consultant firms within the outperforming S&P 1500 index sub sectors.

What ought to traders do?

Nonetheless, whereas that data on outperforming sub sectors is actually helpful for the skilled dealer or portfolio supervisor, there may be one other manner to have a look at the worst month of the yr.

• First, it does ship good points 44% of the time. Meaning it doesn’t must be a disaster for traders.
• Second, purchase low and promote excessive has lengthy been a key Wall Avenue maxim. Nonetheless, if the market typically tendencies up its arduous to purchase low. The maxim tends to get distorted into purchase excessive and promote even greater. The latter can work, however its not optimum.
• Third, the savvy investor with money to spare would possibly wish to think about using any potential market pullback in September to purchase extra shares at favorable costs.
• Forth, greenback value averaging is likely to be a greater method for a lot of traders. This entails investing a set sum of money commonly. That may be completed by means of a payroll deduction and positioned instantly right into a 401K retirement account. Whereas this technique means you by no means get the most effective common value to your investments, it additionally means you by no means get the worst common value.
• Fifth, long run traders shouldn’t fear an excessive amount of. So long as the U.S. sticks to its lengthy standing enterprise pleasant regime, the market will proceed to pattern upwards over prolonged intervals. Any down draft within the coming month will seemingly be shortly forgotten or appear like a blip within the rearview mirror.