We’re in the Worst Month of the Year for Investors — Proceed Sanely

Photo by g-stockstudio / Shutterstock.com

If history is any indication, September will bring investors the worst stock market returns they’ll see all year.

Since 1928, September has had lower average returns than any other month, according to a recent report by LPL Financial. September has also seen more 10 percent drops — technically known as “corrections” — than any other month.

This tendency of large stock market dips to occur in September is why Ryan Detrick, senior market strategist at LPL Financial, calls it “the banana peel month.” He continues:

“Although the economy is still quite strong, this doesn’t mean some usual September volatility is out of the question — in fact, we’d be surprised [if] volatility didn’t pick up given how calm things have been this year.”

If financial prognosticators are any indication, investors should be fearful — if they aren’t already.

“The stage is set for some fireworks in September,” LPL Financial writes. For example, the firm points out that the U.S. Federal Reserve, along with a couple of other countries’ central banking systems, will make interest rate decisions this month.

CNN Money is even gloomier, reporting that “this particular September could wind up being a particularly tough one for investors.”

Why? According to CNN Money:

Increased tension with North Korea could be the catalyst for the market to take a hit. So could any inaction by Washington that leads to a default on U.S. debt payments and/or a government shutdown.

And those are just the political factors. There’s also Hurricane Harvey’s recent devastation and now Hurricane Irma’s potential devastation, CNN adds.

No wonder the publication just reported that its “Fear & Greed Index” is back in “fear” territory, with a score of 43. The index gauges the emotions currently driving the stock market, using a scale of 0 (“extreme fear”) to 100 (“extreme greed”).

What Chicken Littles mean for you

Is the financial sky about to fall? The truth is nobody knows. Even the most astute forecasters are making educated guesses about when the stock market will take its next dive.

Markets can remain overvalued for years, and trying to time the stock market is a fool’s game anyway, as Money Talks News founder Stacy Johnson recently detailed in “The Stock Market’s in Nosebleed Territory — Time to Get Out?” He concludes:

“Even when the next market move looks obvious, it isn’t. And even if you do get out at the top, down the line you’ll be faced with another, equally difficult decision: when to buy back in.”

So there’s no use in freaking out right now. That doesn’t mean you should tune out, though.

Now is a wise time to examine your investments to be sure you’re comfortable with the percentage of your savings that is currently in stocks as opposed to less risky investments. If that percentage makes you uncomfortable, rebalance your investment portfolio. This task is especially important for folks nearing retirement.

Everyone should rebalance their portfolio annually, however, as we advise in “11 Tips for Sane, Successful Stock Investing.” That basically means adjusting the percentages of your money allocated to different types of investments.

For a more detailed explanation, check out “Year-End Review: Evaluate Your Retirement Accounts in 15 Minutes or Less.”

What’s your take on the stock market these days? Let us know by commenting below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Homeowners Say These 2 Kitchen Appliance Brands Are Best
Homeowners Say These 2 Kitchen Appliance Brands Are Best

One brand takes five of the top honors, while another ranks highest in three categories.

How to Buy a Refrigerator, Step by Step
How to Buy a Refrigerator, Step by Step

Here’s how I got the perfect appliance at the perfect price.

Watch This: Organize Your Home With Dollar Tree Products
Watch This: Organize Your Home With Dollar Tree Products

Here’s how to organize every corner of your home using only items from a dollar store.

7 Things You Should Do Before Claiming Social Security
7 Things You Should Do Before Claiming Social Security

To get the most out of your Social Security retirement benefits, you have to think ahead.

Here’s the Average Retirement Age in Your State
Here’s the Average Retirement Age in Your State

Are you on track to retire at the same age as most residents of your state?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

These Major Appliances Got the Worst Reviews in 2020
These Major Appliances Got the Worst Reviews in 2020

Consumer Reports says these home products got the worst ratings from experts.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

15 States With the Largest Homeless Populations
15 States With the Largest Homeless Populations

Some of the states with the highest rates of homelessness might surprise you.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

3 Cable TV Companies Hiking Prices for 2021
3 Cable TV Companies Hiking Prices for 2021

Still married to your cable company? Hold on to your wallet!

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.