The September Syndrome: Myth or Reality?

September blog picture 2023

Traditionally, September’s fall weather brings with it a fall in the stock market. The reasoning behind this notion is often attributed to various factors, including investors returning from summer vacations and reevaluating their portfolios, as well as corporations releasing earnings reports that might not meet expectations. In addition, some infamous historical market crashes, such as the Great Depression crash of 1929 and the 2008 financial crisis, occurred in September or October, further contributing to the perception of September as a risky month.

While September’s historical stock performance might not be stellar, it’s important to challenge the notion that the market’s behavior is set in stone based on the month alone. The financial landscape is far more complex, influenced by many factors that can’t be neatly encapsulated by a calendar date. Investors should approach their decisions with an eye on diversification, risk management, and a healthy skepticism of market myths.

Managing your investment portfolio
If you are falling into line with other September investors and reevaluating your portfolio, the first question to ask yourself is, “Have your goals changed?” Are you saving for retirement? Buying a home? Preparing for your children’s education? Whatever the objective, understanding the market and steps to building a strong portfolio can help set you up for success. Here are some key steps to keep in mind as you invest:

1. Diversification: Maintaining a diversified portfolio across different asset classes and sectors can mitigate risks associated with the volatility of individual stocks. A well-balanced portfolio can help spread the impact of any negative market events.

2. Long-term perspective: Focusing on long-term investment goals and adopting a buy-and-hold strategy can help buffer against short-term market fluctuations. Remember that while September or other months may exhibit downward trends, the broader market tends to recover over time.

3. Stay informed: Keep a close eye on economic indicators, corporate earnings reports, the Federal Reserve, and news that might impact the markets. Stay informed about the current economic climate and subscribe to local financial institutions’ newsletters (like Anchor Wealth Management) who send out monthly market updates to clients. Yahoo Finance is another resource that keeps it clean and provides financial and economic facts.

4. Avoid emotional decisions: Emotional reactions to market swings can lead to impulsive (and often poor) long-term decisions. Stay disciplined and avoid making drastic changes to your portfolio based on short-term fluctuations. Patience and staying calm are key.

6. Don’t wait: If you are new to investing, don’t wait for a specific month or time of year, as we always say, “The sooner you start investing and saving, the better.” If the stock market is on the down swing and you’ve always wanted to start investing, it might be a good time to jump in while stocks are on “sale.”

5. Seek professional guidance: If you’re unsure about how best to manage your investments to meet your goals, seek help from a financial advisor who can provide personalized advice based on your risk tolerance and financial objectives.

While September may be infamous for its turbulent stock market, remember the key to successful investing lies in prudence, patience, and good preparation for market challenges that may come your way. Happy investing!

By Chris Perry, CFP, CFTA, Wealth Advisor