September Is The Cruelest Month

September is the cruelest month - Mark Hulbert - MarketWatch
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Mark Hulbert Archives | Email alerts Aug. 31, 2011, 12:01 a.m. EDT
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September is the cruelest month

Commentary: September on average has been terrible for stocks U.S. stocks lower; confidence data coming The Technical Indicator: Technical cross Matthew Lynn's London Eye: U.S., U.K. Looking at a scary September Share: More
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Email Print Comment By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) The stock market definitely has its work cut out for it in September. The months historical record is nothing short of dismal, and there doesnt appear to be any easy way to wriggle out from underneath the sheer force of that record. Since 1896, for example, when the Dow Jones Industrial Average DJIA +0.18% was created, the Dow has lost an average of 1.07% in September. The average gain for all other months is 0.71%. That spread of 1.78 percentage points is statistically significant at the 95% confidence level that statisticians often use to determine if a pattern is most likely genuine.
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After bruising August, brace for September

September is the worst month on the calendar for stocks, with losses averaging up to 1.2%, according to MarketWatch's Mark Hulbert, who says that after a lousy August there's evidence September comes in worse. Laura Mandaro reports. Image courtesy of Getty Images.
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Furthermore, there has been a remarkable consistency to the stock markets dismal performance during September. During each of the last nine decades, for example, Septembers rank relative to other months in terms of performance has never been higher than ninth. It was dead last in five of those nine decades including the most recent one. To be sure, Septembers terrible reputation is widely known, and patterns often stop working once too many investors begin trying to exploit them. But the pattern has been widely known for many years already, and shows no signs of weakening. For example, it was more than 20 years ago that (as far as I can tell) the first academic study appeared in which Septembers significantly below-average return was noted. Since that study was completed, the spread between Septembers average return and that of all other months has been even wider than it was up until that point. Might this coming September escape these odds, since the last several months have been such tough ones for the stock market? Unfortunately, its difficult to make this argument on the basis of the historical record. In past Septembers, in fact, the stock market on average has performed even worse whenever the months immediately preceding it were bad ones for the stock market. Like now, for example. Perhaps the best argument that stock market bulls can make about September is that there would appear to be no good reason for why the month should be such a bad one for the stock market. Without a good theoretical explanation for a pattern, statisticians often remind us, there remains a not-insignificant possibility that the pattern is bogus. This isnt to say that there is no explanation for Septembers dismal average performance.
Uncertainty drove August trading; it could last 3.

MARK HULBERT
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Why would anyone want to weaken the economy?
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But I have looked far and wide and have never found one. If you know of one, please let me know Id love to study it. The bottom line? Septembers terrible record is like a crime without a motive. Be bullish at your peril. Click here to learn more about the Hulbert Financial Digest.
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gusisback 4 hours ago
+2 Votes
WebMD Catches Flu from Bears
Good article Mark. So, what do you think, Indxes down 30% for September? Thank you for a good article. YOU ROCK!!!!!!
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Longshorn 4 hours ago
+2 Votes
Perhaps fear of an October plunge and need for cash to fund a fat check to the IRS when October 15 rolls around.
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Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD... Expand Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD became a service of MarketWatch in April 2002. In addition to being a Senior Columnist for MarketWatch, Hulbert writes a monthly column for Barrons.com and a column on investment strategies for the Journal of the American Association of Individual Investors. A frequent guest on television and radio shows, you may have seen Hulbert on CNBC, Wall Street Week, or ABCs World News This Morning. Most recently, Dow Jones and MarketWatch launched a new weekly newsletter based on Hulbert's research, entitled Hulbert on Markets: Whats Working Now. Collapse More from Mark Hulbert
theaccusersgift 4 hours ago
Right. For those filing estimated taxes, there is a big payment due Sept 15th. Also, many localities have the fall property taxes due in September. So maybe it's a combination of "back to school" payments and tax payments all hitting in the same month.
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ActionFive 4 hours ago
+1 Vote
Septembers terrible record is like a crime without a motive. Be bullish at your peril. ------------------------------See bulls, your friend Hulbert is disseminating the storyline that his masters pay him to blow.
Contrarians are bullish Is golds bull market over? Bottoming is a messy process A market of stocks, or a stock market? How volatile has the market really been?
theaccusersgift 4 hours ago

Mark,
+1 Vote
The best explanation I've heard is September is when all the "back-to-school" and tuition and books bills come due. I see this in my own home, my ex and I sell in September to pay my daughter's tuition and books. "Back to school" expenses charged on a credit card are also due and some selling occurs for that. And it's too soon to receive money from harvesting crops. Note: Since some schools are on a quarter system and some schools are on a semester system and high schools have expenses throughout the year, there is no corresponding "Spring Month" that gets hit hard by this effect since Spring expenses are paid out over several months.
StormInvest 4 hours ago
+1 Vote
Time to dump everything, and make Sept the worst ever in history. Oh wait, thats for next september. Have you compared septembers that are on election years versus non-election years? presidential elections vs congress vs both vs none?
markachute 4 hours ago

Mark were you smiling when you wrote this article ?
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jtom 3 hours ago
+1 Vote
Read a theory on this a couple of decades ago. If I remember correctly, it said that at the beginning of the year, there were basic assumptions as to how business would fare for the year. First quarter disappointments were blamed on winter weather. The second
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31/08/2011 5:35 PM
and third quarter results were usually a little better, but still suffered downward pressure from businesses hurt by droughts, floods, fires, tornadoes, or hurricanes. Toward the end of the third quarter it was clear that the expectiations of the past January for the year were not going to be realized, and the markets responded by going down. In short, almost all unexpected events, which are numerous throughout the year, hurt business, and by the end of the third quarter ... more
ActionFive 3 hours ago

Looks like Mark is one of these sell your stocks and buy gold types. Next article will be telling us the fed manipulates the markets and PPT stuff.
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YupPup 3 hours ago
+1 Vote
Uhhhh . . What about September 2010 . . ? I think The Bernanke had something to say about that.
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orlsdad 2 hours ago
+1 Vote
YupPup is correct. September 2010 was a very good month. Extraneous factors like the anticipation and or confirmation of QE3 could make September 2011 a bullish month as well. I am betting on it. W/O QE3 i would have been more cautious.
zoilo 58 minutes ago

Not to mention October November December etc.
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September Is The Cruelest Month - Mark Hulbert - Market Watch

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September is the cruelest month - Mark Hulbert - MarketWatch

August 31, 2011

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