If the September Effect Hits Artificial Intelligence (AI) Stocks This Year, History Says This Is the Best Place to Hide
September is historically the weakest month in the stock market.
Overview
Calendar dates are not supposed to matter in efficient markets. Stock prices should reflect a company's cash flows, as well as sentiment toward macroeconomic variables such as interest rates. The fact that Labor Day is right around the corner shouldn't matter. Yet for nearly a century, one month has exhibited a noticeably different pattern from the rest of the year.
September is the only month in which the S&P 500 (SNPINDEX: ^GSPC) has posted a negative long-run average return, down roughly 1.1% between 1928 and 2025. While there is no single reason for September's historical weakness, much of the declines are attributed to portfolio managers returning from summer vacations and rebalancing their portfolios. This means liquidity that had thinned out during July and August has to absorb new selling pressure.
Details
Investors should care because the September Effect is influential enough to manifest in even the most crowded growth trades. Let's explore what that could mean for artificial intelligence (AI) stocks.
Source
Originally published at www.fool.com.