INCLINE VILLAGE, Nev. — Market Twain had it right when he said October is a scary month. There was the crash of 1929 and 1987. But history shows that the market’s worst performing month is September. According to the Stock Traders’ Almanac, over the past 61 years, September has the worst record of any month of the year with an average loss of 0.5 percent for the Sandamp;P 500. Jay Kaeppel, author of Seasonal Stock Market Trends, provides further research. The market tends to do well in the first three trading days after Labor Day (the newspaper’s publication marks the end of this period). Since 1955, if you had only invested in the Dow during these three days you would have an overall gain, where as if you only invested only in the month of September you would have a cumulative loss of 55.3 percent.The second half of September tends to be worse than the first half. Since 1955, if you invested in the Dow for the first 14 trading days in September you would have a cumulative loss of 17.7 percent. If you only invested in trading days 15 through 21 then you would have a cumulative loss of 40.1 percent.So should we put on our traders hats and play the odds? There are no guarantees. September shows a loss 62 percent of the time, hardly a statistical slam dunk. Plus, in five of the last seven Septembers the market has gained. To reduce portfolio risk it is best to hold some income-based securities. Investors continue to look for yield wherever they can find it, which is driving up prices in securities we’ve highlighted in past columns. Western Asset Emerging Market Debt (ESD), Partner Re Preferred “E,” U.S. Bank 6 percent Fixed/Float Series G all yield between 5 to 6.5 percent and have hit new highs. The U.S. Bank issue has already appreciated 3.7 percent since we featured it just two months ago! There are still good opportunities for those seeking income and stability.— David Vomund is an Incline Village-based fee-only money manager. Information is found at www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.
September 3, 2012 | Back to: News