What September Signals for Stocks

Transcript:

Ken Fisher:

So, there's a lot of sayings—sayings about days of the week, months of the year, seasons. Most all of them are nonsense. The one that's probably the most pervasive is that September is a bad month for the stock market. Now, while there's some statistical validity to that, it's not valid, and let me take you through a little bit of that.

But I get asked this question pretty much every year because September comes up routinely. Should you try to avoid September? The answer is no. Why? Because while September, on average, is the worst month of all of the months going back over 100 years, if you take out five of them, it's still overall a positive month. Even if it were a slightly negative month. You say to yourself, and this is a point that most people don't think through— there are more costs to inning and outing than you think. There's not just the obvious brokerage cost, which in this day and age is very small, but there's also the split between the bid and the ask, which is a bigger cost, and then, do you time it perfectly or not? Which you almost certainly never do.

So that you say to yourself, since the market's doing this the whole time, whether it's going up or down, you don't time it perfectly. You've got the spread cost, you've got the brokerage cost—for something that, other than a few Septembers out of all of the Septembers, has been slightly positive. And you say, why do you want to avoid that? Why, for something that most of the time, not the exceptions, is actually positive, do you want to get out? Now, there's months in history where September just stands out like a negative sore thumb, and people can't get them out of their mind. The crash of the market in the Great Depression. All those months were terrible. You take those out. And of course, all the other months were terrible too.

But Septembers were particularly bad then, or even the negativity of September 2022, recently, as a month that was not good. But frequency is often a misleading feature. In the long term, if you exclude a few Septembers, Septembers a positive month. So, trying to sidestep that just because it's a lower positive number, on average. And why is it a lower positive number, on average? Averages are often misleading.

When you buy things, you don't get the average. When you buy things, you get all kinds of other stuff. And some Septembers are perfectly marvelous and you just don't quite know what will happen with that. So, you really ought to think about September as if it was any other month of the year, and move forward with it based on where are we versus where you think we'll be 3, 6, 9, 12, 18 months from now? Because that's how you should be postured anyway.

Thank you so much for listening to me. I hope you found this useful. Hi, this is Ken Fisher. Subscribe to the Fisher Investment YouTube channel. If you like what you've seen. Click the bell to be notified as soon as we publish new videos.