End of Summer

An early Labor Day brought unofficial summer to a swift end.  Kids are back in school, renters are turning in the keys to the summer cottages, and beach towns are returning to peace and quiet once again.

And our attention turns back to the stock market.  Since 1928, September has the distinction of being the worst month for the S&P 500.  September has an historically low return of negative 1.2%.  January, April and December have seen average monthly returns of approximately 1.1%, and July has been the best performer with a gain of 1.7% historically.

Yet, despite September’s 1.2% average loss, it had a positive return in 2% in 2024!  And, over the last 20 years, November has done better than December.

So which is it?  Is September a good month . . . or a bad month for investing?  Will November be better than December this year?

This points out the important role of dollar cost averaging in stock market investing.  It’s too tricky to figure out what will be the best month in any given year.  And it’s too risky to sit on the sidelines for a month and then jump in during what is expected to be the best four months based on previous performances.

Picking winning months is too hard to do.  There’s simply no guarantee that this will be the year or the month that adheres to the previous pattern.

Instead, by investing steadily (either through payroll deductions or your own consistent monthly investing), you don’t have to worry about the best and worst months.  There’s no need to burden yourself with “timing the market.”  Your investing dollars will average out over the year.

When it comes to investing, leave seasonal patterns to the beach towns.  Keep investing!