September Is Historically a Slow Month for Stocks. Here's Why That Shouldn't Matter to Investors
Don't let the "September Effect" drive you out of the market.
Overview
September usually isn't a great month for U.S. stocks. The S&P 500 (SNPINDEX: ^GSPC) has averaged a decline of roughly -0.6% in September since its inception, making it the only calendar month with a negative historical average.
That "September Effect" can be attributed to three factors. First, many money managers return from their summer breaks and rebalance their portfolios. By locking in their profits or dumping their losers to harvest tax losses before the year ends, those institutional investors can depress the broader market. Second, the Fed's interest rate decision in mid-September can exacerbate that selling pressure. Lastly, the widespread media coverage of the "September Effect" can drive more investors to pre-emptively trim their positions in late August to dodge that decline.
Image source: Getty Images.
Details
Source
Originally published at www.fool.com.