Is September really the worst month in the stock market?

Many investors will point to September as a difficult time for the stock market, but is it just an opportunity in disguise? Let’s take a look at the data.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Frustrated young white male looking disconsolate while sat on his sofa holding a beer

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Ah, September. The month that strikes fear into the hearts of even the most stoic investors. Many will know the adage: “Sell in May and go away, don’t come back till St. Leger Day.” But is there any truth to September’s reputation as the stock market’s bogey month? Let’s dive into the data.

The September effect

First things first, let’s look at the cold, hard facts. According to the data, September does indeed have a rather poor track record. Over the past 20 years, September ranks as one of the worst-performing months. The FTSE 100 has typically fallen by over 1.1% for the month, and the S&P 500 shows September as the only consistently negative month. Even the tech-heavy NASDAQ 100 can’t escape September’s curse, with it being one of the worst months over the past two decades for that index.

Interestingly enough, only five S&P 500 companies posted an average gain in September in the last five years. These all sit within the financial sector, with the best performer, PNC Financial Services (NYSE:PNC), returning an average of 1.2% in the same time period. With its highly diversified operation, it’s no surprise to see the company perform well throughout the year, with a healthy 54% rise in the last year alone.

Should you invest £1,000 in Pnc Financial Services right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Pnc Financial Services made the list?

See the 6 stocks

Created with Highcharts 11.4.3PNC Financial Services PriceZoom1M3M6MYTD1Y5Y10YALL1 Sep 201930 Sep 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

The firm pays a decent dividend of 3.54%, backed up by solid cash flows, and a payout ratio of 52%, suggesting this could rise further if profits allow. A discounted cash flow (DCF) calculation suggests it’s still about 37% below fair value too. Despite annual earnings of 12% forecast over the next five years, I wouldn’t call this a sure thing. There has been plenty of insider selling in the last three months. Although this can be unrelated to performance, it’s not exactly inspiring to see over $2.5m sold by senior management.

A silver lining

While the general data might seem gloomy at first glance, there’s a flip side that long-term investors should consider. If September tends to see market dips, isn’t this precisely the time when we should be looking for bargains? Warren Buffett famously said, “Be fearful when others are greedy and greedy when others are fearful”.

For those of us diligently investing each month, September offers a chance to buy more with the same amount of money. Remember, we’re investing for years, not months. A single poor month matters little in the grand scheme of a decades-long investing journey.

An autumnal opportunity

So, is September really the worst month in the stock market? Statistically speaking, it has indeed been a weak performer. But for investors with a long-term mindset, I’d say it presents an opportunity rather than a threat.

Instead of fleeing the market, consider these Foolish strategies: keep calm and carry on investing by sticking to a regular investment plan. Use any September weakness to snap up quality companies at a discount. Focus on fundamentals, as a company’s long-term prospects matter more than short-term market jitters. Embrace volatility and remember that market fluctuations are the price paid for superior long-term returns.

So while September might give us a bumpy ride, it’s just one month out of many. By keeping a cool head and focusing on the long game, investors can turn September’s reputation as the worst month into an opportunity for building lasting wealth.

Should you buy Pnc Financial Services now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Gordon Best has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »