This year’s market gains (15 percent) all came early and stocks went sideways through the summer. What can we expect this month? Both bulls and bears can say history is on their side. Maybe.
Jay Kaeppel, author of “Seasonal Stock Market Trends,” is on the bear side. He correctly points out that for many years September has been the market’s worst month.
True, there are only 12 months so statistically one has to be the worst. For the record, August has been the second worst. How bad has September been?
Since 1955 if you had invested in the Dow Industrials only in September you’d have lost about half your money. Kaeppel points out that most of the weakness came later in the month. So, if the record holds the worst is still ahead.
Wayne Whaley, of Witter & Lester, Inc., takes the other side. He found that since 1950 when the S&P rose in July then fell in August it has gained in September 11 of 15 occasions.
If that record holds, this month is likely to be a good one. Whaley prefers the Nasdaq and notes that when the Nasdaq Composite rises in January (it did this year) it’s risen in September 82 percent of the time and topped the S&P 500 70 percent of the time.
So what are we to make of all this? Only that people with computers can always find trends and strategies that would have worked in the past.
But of course we are investing for the future, so it’s up to each investor to determine which trends have meaning for the future.
Expect sharp rallies and sell-offs this month as investors focus on the Fed’s policy, the debt ceiling, Syria, Bernanke’s successor, and more.
But come September 30th one side or the other — bull or bear — will be right. My take: It will be a volatile month. That’s a safe bet.
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.