Date: September 2, 2022

September is a Cruel Month

The cruel month of September is here and it’s uglier when the month begins in a downtrend like it is now. August ended up working out similar to what I wrote about a month ago.

On average September is down more than 1% with 50 out of the last 90 being lower overall. In a downtrend, 27/38 have been lower with losses exceeding 3%. In midterm election years, 60% of Septembers have been down.

If you’re looking for a bright spot, when August is weak, the week after Labor Day usually sees a bounce.

Aside from the stats about September, the markets begin the month a little on their heels following the swoon from the mid-August peak. Not surprisingly, sentiment has very quickly turned sour with it barely getting back to neutral after the June bottom as well as the proximity to that low. Additionally, it seems like after any small pullback, the pundits and the masses immediately warn about lower prices.

One of many themes this year has been time. The markets need time to work through the rate hikes and inflation and then the slowdown. Investors are generally impatient. The secular bull market isn’t over. Inflation isn’t going to spike from here. The world isn’t going to freeze to death come winter. 2023 is setting up to be a strong year for the stock market. The risk lies in the next 4-6 weeks, not months and not years.

The final weekend of traditional summer is here. How depressing. And you know how much I love winter, although I love fall too. And I guess spring is okay too. Hey, at least college football starts with the NFL less than a week away. I see lots of fantasy football homework in my plans. Enjoy the weekend. I am looking forward to a Las Vegas night on Saturday and big BBQ on Sunday with some golf sprinkled in. Let’s hope Mother Nature isn’t too cruel on Labor Day.

On Wednesday we bought $JAAA. We sold high yield funds. On Thursday we bought XLV FHLC FSTA and levered S&P 500. We sold EEM and some XOP.


Paul Schatz, President, Heritage Capital