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Will September be the Cruelest Month?

Posted By Barry Ritholtz On August 15, 2005 @ 8:28 am In Investing,Markets,Psychology | Comments Disabled

click for larger chart

September_wsj_cruel_2 [1]

Today’s WSJ [2] has some comments on everyone’s favorite month:

Ah, autumn: The evenings turn cooler, the children head back to
school — and the stock market blows up.

The stock market doesn’t always hit trouble in the fall, of
course. But September long has been far and away the worst month for stocks.

And there is plenty to worry about this September: Oil is
approaching $70 a barrel, the Federal Reserve is hard at work raising short-term
interest rates, and September marks the quarter’s end, when companies facing
high analyst expectations may have to warn of profit disappointments.

Since 1900, September is the only month in which the Dow Jones
Industrial Average has fallen more often than it has risen. The Dow industrials
have fallen 1.2% in September, on average, making it the only month with an
average decline of any significance. The industrials fell in each of the past
six Septembers, and in 18 of the 25 from 1980 through 2004. More bull markets
have ended in September than in any other month, according to Ned Davis Research
of Venice, Fla.

For October, the average gain is barely above zero. And when
really bad things happen, they somehow do it in October. That is when stocks
crashed in 1929 and 1987. Of the Dow industrials’ 15 worst one-day percentage
declines, seven came during October."
(emphasis mine)

As noted previously [3], I am looking to buy into the next intermediate lows — which we are on target for, my expectation is from late August to mid-September . . .


For Wall Street, Cruelest Month Is September [2]
August 15, 2005; Page C1

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/08/will-september-be-the-cruelest-month/

URLs in this post:

[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/september_wsj_cruel_2.gif

[2] WSJ: http://online.wsj.com/article/0,,SB112406091688412853,00.html

[3] previously: http://www.nytimes.com/packages/html/international/2005_GAZAPULLOUT_GRAPHIC/index.html

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