Hulbert: September's the Worst Month for Stocks, But That May Just Be a 'Fluke'

Wednesday, 11 Sep 2013 08:31 AM

By Dan Weil

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Stocks perform far worse in September than any other month, but that doesn't mean you should dump them, says Mark Hulbert, editor of the Hulbert Financial Digest.

"That is because there appears to be no convincing explanation for why equities have performed poorly in September," he writes in The Wall Street Journal. "So there is a good chance September's dismal historical record is just a random fluke that won't persist."

Since its 1896 beginning, the Dow Jones Industrial Average has dropped an average of 1.09 percent in September, compared with an average gain of 0.75 percent in the other 11 months, Hulbert maintains.

Editor’s Note:
Obama’s Budget Takes Aim at Retired Americans

If there truly was a reason for the September decline, the market would self-correct, Lawrence Tint, chairman of risk-management firm Quantal International, tells Hulbert.

"If a convincing explanation for the September effect were ever found, savvy investors would immediately begin jumping the gun by selling in August, others, in turn, would try to beat them, and the historical pattern would quickly disappear."

The insignificance of the September swoon points to a broader truth, Hulbert claims. "Rarely do the myriad patterns that get Wall Street's attention justify deviating from a simple strategy of buying and holding index funds."

Art Hogan, market strategist at Lazard Capital Markets, tells MarketWatch that light trading volume and high volatility will likely prevail in the stock market "until we get resolution in a lot of the September issues."

Those include a possible military strike against Syria, the government budget, the debt ceiling and the naming of a successor to Federal Reserve Chairman Ben Bernanke.

Editor’s Note: Obama’s Budget Takes Aim at Retired Americans

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