September – Off to a Rough Start
Source: http://www.investmentpostcards.comPosted on Friday, September 5th, 2008 | In Market Commentary
Many reports have been published over the past few days about stock market seasonality and, specifically, about September typically being the worst month of the year.
I included the following paragraph in a recent post: “Seasonality indicates that ‘September has firmly secured the rank as the worst month of the year’ (Stock Trader’s Almanac), but that a year-end rally typically starts in late September / early October.”
September has certainly got off to a rough start, with both the MSCI World Index and the MSCI Emerging Markets Index having declined every single trading day since September 1.
I realize numerous studies have been done on the historical pattern of monthly returns, but in order to gain a first-hand feel for the data, I have researched monthly returns of the Dow Jones Industrial Index from January 1958 to August 2008. Some interesting statistics are summarized in the table below.
The following two tables show the percentage positive months (top graph) and the average monthly return (bottom graph) respectively.
It is clear from the above that September, on average, has historically been the worst month. But stock markets recovered after that and October, November, December and January have traditionally been good months.
Time will tell whether the current panic mode will make way for a better period in the weeks to come.
Last 5 posts by Prieur du Plessis
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 About Prieur du Plessis (http://www.investmentpostcards.com)
Prieur du Plessis has 25 years’ experience in professional investment research and portfolio management. More than 1,000 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns. He has also published a book, Financial Basics: Investment. Prieur is chief executive and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and other African countries. Plexus is the South African partner of John Mauldin, author of the Thoughts from the Frontline e-letter, and also has an exclusive licensing agreement with California-based Research Affiliates for managing and distributing its enhanced Fundamental IndexTM methodology in the Pan-African area. Prieur is 52 years old and lives with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His recreational activities include long-distance running, motor cycling, traveling and reading. |
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