September is usually rough on stocks. What comes next?

The ‘Ber months are here and September is off to a chilly start in the stock market. The S&P 500 dropped 4.25% last week as the return of the Pumpkin Spice Latte generated more enthusiasm than recent earnings reports. Underwhelming job numbers haven’t helped.

A slow start isn’t out of character. Going back to 1928, September is the worst month, on average, for market returns. Recent years have been no exception:

• 2023:  down 5%

• 2022:  down 9%

• 2021:  down 5%

• 2020:  down 4%

I haven’t read any compelling explanations for the seasonal downdrafts, but experienced investors are likely humming “Wake me up when September ends”:

https://www.nasdaq.com/articles/heres-the-average-stock-market-return-in-every-month-of-the-year

Things have historically gotten much better in the fourth quarter. October usually sees a recouping of sorts, while November has gained around 2/3 of all years with some of the highest average returns.

There are no rules in the stock market, only suggestions from the past. I have no idea what to expect when you throw something like a transitioning economy or an election into the mix. Anything can happen.

I do know it would be too simplistic to invest based on something arbitrary like the month of the year or phase of the lunar cycle. Markets are too competitive. Economies too dynamic.

Instead, we pay attention to history, because the lesson is usually “This is Normal”