Is September the Worst Month for the Stock Market?
The September Effect: Myth, Data, and the Real Reason Investors Get Spooked
Pumpkin spice lattes are back, the heat is finally dialing down, and Spirit Halloweens are gearing up to haunt every empty strip mall in town. Fall is here. If you’re into flannels and crunchy leaves, it’s a vibe. But if you’re an investor? Some say it’s a red flag.
Let’s talk about that rumor swirling in the crisp autumn air: September is the worst month for the stock market. Is it true? Should we care?
We did the digging.
Seasonal Suggestions (And Old-School Superstition)
You’ve probably heard of "Sell in May and Go Away", a catchy — if outdated — piece of investing advice. It suggests that investors should sell in May, chill all summer, and jump back in around Halloween. The origins of this phrase go back to 18th-century London horse racing, not stock market science. But somehow, it stuck around.
At NEST, we prefer data to dogma, so we approach investing rhymes with skepticism.
And this brings us to the fall version of that lore: The September Effect.
Yes, it’s real — to a degree. Historically, September is the weakest month for the S&P 500. Since 1928, the average return in September has been -0.99%. And this phenomenon isn’t just limited to U.S. markets; it's seen globally.
Some analysts attribute it to cognitive and emotional biases — if investors expect September to be bad, they may unconsciously act in ways that make it worse.
It’s worth noting that both May and September mark seasonal transitions, which can pull people away from their desks — less trading, less oversight, more reactionary moves. But does that justify basing your strategy on a calendar?
Let’s see what recent data says.
Contemporary Data: What's Happening in Real Time
In 2021, the S&P 500 had already gained over 20% by the end of August. That's significant. In fact, in the eight other years since 1991 where the market was up 15%+ by Labor Day, it went on to gain an average of 8.8% through year-end.
While volatility remains high — thanks to inflation, shifting Fed policy, lingering COVID variants, and labor market challenges — the market doesn't seem ready to roll over just because it's fall.
So while the "September Effect" is a data point worth noting, it's not a crystal ball.
Strategy: Myth-Proof Your Portfolio
At NEST, we manage our portfolios actively — and in-house — year-round. We don’t base decisions on historical folklore. Instead, we use real-time data, frequent analysis, and custom allocation to keep our strategies resilient, whether it’s May, September, or somewhere in between.
If you're ready to move past market myths and toward a more grounded approach to investing:
📩 Email us at info@nestfinancial.net
🧠 Join our upcoming free webinar: NEST Edge on Sept 15 at 12:30 PM CST
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DISCLAIMER: This article is for educational purposes only and is not financial or investment advice. For guidance tailored to your unique goals, contact us at info@nestfinancial.net.