Friday, September 2, 2011

Do investors need to fear September?

September is the cruelest month for stock market investors.

No one can explain why, but historically New York’s S&P 500 has dropped an average of 1.1% every September, making it by far the worst month of the year, according to the Stock Traders’ Almanac.

It has also been the month that has set the stage for some of the biggest crashes. The 1929 collapse started in September, and more recently, there was the bankruptcy of Lehman Brothers in September 2008, which triggered the latest financial crisis.

After a lousy August, investors have good reason to be nervous.

“We are going to look at continued volatility, there’s no doubt about that,” said Larry Moser, regional sales manager at BMO. “There is a myriad of issues facing financial markets and we have had volatility all summer long.”

The S&P 500 ended August with a loss of 5.7%, after decreasing almost 14% in the wake of the squabble over the U.S. debt ceiling, which saw that country lose its AAA credit rating.

September started badly with the markets continuing to decline. A four-day global slump took valuations back to levels not seen since 2009. more