Market Volatility and Investing In September
Do you remember, investing in September?
“Ooo ee ooo, selling in September…”
Most people remember September from the Earth, Wind & Fire song, but when it comes to investing, most people would rather forget it all together. September is considered, by some, the worst month for the stock market because there is so much market volatility.
The History Behind the September Effect
When looking back at trends throughout history, on average September is when the stock market's three leading indexes usually perform the poorest. Since 1950, the Dow Jones Industrial Average (DJIA) has averaged a decline of 0.8%, while the S&P 500 has averaged a 0.5% decline during the month of September (source: Investopedia).
This anomaly is dubbed the ‘September Effect’. It’s something that happens every single year - unrelated to any market events or news - and it affects the market globally, not just the US. Although many see this a negative, there is a silver lining, because there are opportunities to buy stocks that are “on sale.” The best investing advice I can give you is to keep your cool...
Investing Tips to Keep Your Cool
- Don't freak out. Our primary instinct is to panic when things don’t go exactly to plan, but remember that it’s not the end of the world. Try and avoid giving in to panicked responses.
- Ride the wave. Now that you know that the market usually dips this time of year, feel comfortable in the knowledge that it’ll start going in an upward trend in no time.
- Stick to your long-term plan. Remember that time is your friend when it comes to investing. Avoid bailing on your financial plan: by staying put, you’ll eventually see a positive trend again and reap the rewards in no time.
- Look for buying opportunities on stocks you've been watching. A great stock market tip is that a lot of stocks will be priced lower than usual in September. This is a great opportunity to buy into stocks you’ve had your eye on, or even take a chance on new ones.
Guessing what the market might do is not a productive way to create wealth. Instead, focus your attention on finding companies that have the potential to beat market volatility in the long-term. And let's start coining the ‘September Effect’ as the ‘September Sale’. And who doesn't love a good sale, especially on money-making stocks!
If you’re looking for some more detailed financial guidance, I have a limited number of intensive coaching spots available. I can assist you with a specific area of concern in investing or overall money management, or help you work on overcoming false money beliefs that you may have standing in your way.
