Don’t Let the “September Effect” Keep You From Potential Profits
|By Mahdis Marzooghian|
August was a turbulent month for markets, but we’ve thankfully made it to the other side — only to find ourselves in a month that’s earned the name, “The September Effect” from investors.
What does that mean exactly?
Well, historically, September is known as the worst month for stocks, and there’s strong statistical evidence to prove it. From 1928 to 2021, the S&P 500 index has averaged a 1% decline during the month of September.
What causes this phenomenon?
Anything from seasonal behavioral bias — as investors make changes to cash in on their stocks at the end of summer — to harvesting tax losses. Plus, there’s usually lighter trading volume during the summer months since most investors go on vacation and avoid actively trading during this time.
Then, once fall rolls around and investors return from vacation, they exit the positions they planned on selling. In turn, the market experiences increased selling pressure and an overall decline.
But whatever the reason, it certainly doesn't mean investors should move to the sidelines and try to wait out the market until conditions turn bullish again.
Quite the opposite, in fact. And if you’re following along with the research and guidance of our Weiss Ratings experts, then you’re already well-positioned to stay in the market and profit no matter if it’s a historically down month or what have you. Check out their latest research below …
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Until next time,
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