Date: September 7, 2017

The Misconception About September’s Ire

Academics and the media do a pretty good job of warning the investing public of September’s historically poor performance. In fact, many investors become alarmed each year as August comes to an end and the various dire studies are paraded around. After all, since 1928, September is by far the worst month of the year with an average return of -1.1%. 39 have been up while 49 have been down. The other 11 months are basically flat or up with all showing more ups than downs.


Most analysts stop right there and find no need to dig any deeper. After all, September is factually proven to be the worst month and investors should proceed with caution. But do those 39 months where the month is up have anything in common? How about those 49 down months?

With some help from Oppenheimer & Co., I went back and found that much of September’s negativity is dependent upon the position of price as the month begins. You can essentially use any long-term trend here to determine that. In this case, I looked at the 150 and 250 moving averages and Oppenheimer used the 200 day moving average. There is nothing magical about any of the numbers.

When September begins with the S&P 500 trading higher than its long-term average (trend), the month turns a negative 1% performance into a plus .50% performance which is very average. Stop and reread that again. When stocks were generally in an uptrend, September’s nasty bite was gone.

Since the bull market began, here is how Septembers have fared when beginning in an uptrend.

2009 – up

2012 – up

2013 – up

2014 – down

2016 –  even

Looking at September a different way, let’s take a look at Septembers the year after a presidential election.

2013 – up

2009 – up

2005 – up

2001 – down

1997 – up

1993 – down

1993 was the only down month which also began above its long-term trend. In other words, a failure in terms of the studies. 2001 was a large loss of 8%, obviously exacerbated significantly by 9-11. The other down months were relatively mild.

While the masses often fret about September, a closer look reveals that all Septembers are not created equal. September 2017 began with the S&P 500 in an uptrend.

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Paul Schatz, President, Heritage Capital