If you take a look at the chart below it is clear that when measuring the last 100 years, 50 years, and 20 years, September was the worst month for the performance of stocks. By far.
So while some might contend that September would be the month you want to avoid buying stocks, I would argue the exact opposite. I think September is one of the BEST months (historically) to buy stocks.
Because in September you get a market that is falling and stock prices that are going down. Remember, while it may be painful to see stock prices go down for the stocks you already own, paying less is better than paying more for the ones you are going to buy. Additionally, in historical terms the four months following September look pretty good so you are buying when stocks are cheaper just before a period where the market is typically strong.
September Is The Best Month To Buy Stocks
Looking at the chart above, the stretch of five months (May, June, July, August, and September) is the slowest and least profitable for stock investors. One of the reasons for that is during summer, school is out and people/families are busy taking vacations and doing the many other things that people do to have fun during that time of year. In other words, stock market investing is not on the top of people’s minds like it might be during the rest of the year when everyone is hunkered down at work.
It seems September is the bottoming out month when things are the worst. Market sentiment is at its lowest which is shown by peoples propensity to sell and drive the market down. For some investors its a tough month to get through as their fear rises with all the selling.
But as September progresses and the stock market goes down day after day. there is a time when buying becomes the best course of action. It might just be the best month to be a buyer of stocks, no matter whether you are a shorter term investor or one that has a long term investing horizon. Buy stocks lower sometime in September and sell them higher during the ensuing months or years when the outlook improves and when the market is going/has gone back up.
**Disclaimer: Please note that EVERYTHING I have written in this article must be viewed in HISTORICAL TERMS. It might not be true this year or any other single year but has generally been true when looking at the 100 years of chart history above.