Best and Worst Months in the Stock Market

The primary reason for investing in the stock market is to make gains. And the best way to enjoy the most gains is to have perfect timing for withdrawals. However, stock prices tend to go up and down of their own volition. Some months give the best stock market returns, while others are just the worst. Experts agree that there’s no definitive way to know the best month to invest in the stock market stocks. But by analyzing past market trends, one can get a feel of the months to avoid.

Understanding The September Effect

Since 1950, September has constantly seen an average decline of 0.4% in the S&P 500. On the other hand, Nasdaq has also seen its composite index fall an average of 0.5% during September trading. This year, the S&P 500 was down 3% in September, further highlighting the case of the frequent September decline. Many financial experts link the September low to people selling stocks to send their kids to college, the end of summer, and people taking profits from the market. Although September historically is a lousy trading month, it’s not always the worst month to trade every year. October holds that title, followed closely by November. 

What to Do in the Most Volatile Months

As earlier mentioned, October is the most volatile month of the year, meaning emotions are often very high this time of year. Although it’s difficult to be entirely certain what causes the rise in volatility in October, the trend will continue into 2021 since the S&P is already down by 3% at the time of recording. So, what can investors do to get through the month of the most volatile months of the year? First, it always pays to remain calm and not make any rash decisions. You don’t want to react too much to a trend that always seems to recover a few months later. Plus, if you’re a long-term investor, higher volatility should be the least of your concerns. But if you feel like something needs to be done, please get in touch with your financial advisor for informed feedback. 

Listen now to learn more about The Stock Market’s Most Volatile Months Of The Year.