While I was on my graduate training programme this week, I was totally oblivious to the carnage that was going on in the markets. I have hardly been on my phone. I didn’t have the time or headspace to skim the WSJ let alone read & digest the news! So on Tuesday, I opened the stocks app (aka one of my most frequented spaces) to see what had been going on while I was away. I saw the S&P had gone down by a cool 4.3% and the Nasdaq lost even more: 5.2%. One word: OUCH. Tuesday marked the biggest one-day drop since June 2020. Yikes. 

So, guys, welcome to September! What has historically been the stock market’s worst month of the year. The S&P 500 has fallen an average of 1.03% over the course of the month. I know what you’re thinking – that doesn’t sound like a lot but trust me, it’s enough to make this month the very worst for stocks who have, btw ended this month lower 55% of the time. 

When I started investing, my dad told me to wait till September as that usually marks the markets’ seasonal lows (and March, btw!). And for as long as I can remember my dad talking about investing, he’d always tell me how he’ll be adding more to his investment account in this gloomy month as markets tend to go down for one reason or another! And if you’ve been in the markets for some time, you’ll know this pattern all too well. Honestly, this kinda never fails and Tuesday made sure of that. 

Why is September so sour for stocks? 

September is when stock markets don’t perform well. Understatement, actually. It’s one of the months in the year (along with its miserable March friend) when stock markets go a bit berserk and when looking at your portfolio gives you that feeling after you’ve gone and eaten something nasty. It’s a bit of a mystery for some of us, or at least it was for me. I was always curious why this month has historically been such a Debbie Downer.

I think the reason why this month is simply so sour is because of our emotions and overall psychological makeup rather than it being a numbers’ thing! Take me seriously when I say this: investing has more to do with your emotions than it does with almost anything else and this month pretty much sums it up.

What comes to mind when I say September? Well, depending on which stage of life you’re at, you’ll say something different. If you’re at school, this month is the start of the new year. If you’re at uni, this month is all about settling in and if you’re finishing uni, well, it’s when you’ll most likely be starting your first grad role. Hurrah! 

But no matter where you’re at in life, September is when summer comes to an end. Tans fade and we realise the dawn of the new year is upon us – for better or worse! These post-summer blues are real and they don’t just affect us – they clearly affect stock markets too! 

We’re hit with a reality shock after our summer optimism  

Every September, we’re somehow hit with reality (summer’s end kinda  has that effect) forcing markets to react aka selling off because they’ve been too cheery. Every year it’s something slightly different that markets (and us!) are grappling with and it seems that come September, everyone’s cages get rattled because the reality isn’t as we thought (more like hoped). 

Over the summer, we were cheerful, hopeful even, at the thought that inflation might finally begin to slow down and give us all a break! But then, in September, this most wondrous month, the CPI figure came out. And let me tell you, it was nothing to smile about. In the UK, inflation dipped from 10% to 9.9%. A number that won’t make anyone squeal for joy. Across the pond was a similar story, with inflation falling from 8.5% to 8.3%. Again, nothing to celebrate here.

September made markets appreciate just how much (bad stuff) we’re facing right now. From rising interest rates needed to combat this stubborn inflation stuff to this energy crisis that’s only adding fuel to the fire (get my pun?!) plus central bankers trying to walk the impossible tightrope of raising rates without causing a full-blown recession though it doesn’t take a genius to know we’re already in one. How bad it gets, who knows. But something’s surely in the air. And it isn’t good! No wonder stocks suddenly sold off this week! 

How can you make full use of this miserable month? 

Okay, so you know September sucks for stocks (and maybe for you too!) but what can you do about it? There’s no use in moaning about it, might as well carpe diem if you know what I mean.

When I saw the markets on Tuesday evening I got a little excited. No, I’m no weirdo and do not enjoy seeing the value of my life’s savings tumble but it means that I can buy more of what I love (stocks, duh) at bargain prices. Because I dunno about you, but there’s nothing I hate more than buying overpriced things. Stocks being chief among them!

Think of September as the annual sale for the stuff you love. Think of it as Prime Day. Only loads better. Prime day snatches your pounds; the September-stock-sale on the other hand gives your future self more of those ££££s. Nice, huh?  

It isn’t easy to buy stocks when everyone else seems to be ditching them. It’s way easier to buy when optimism is high and when it looks like these fairytale-like conditions will continue forever. But most make the mistake of buying high and selling low. They buy high because it feels easy and they sell low because it’s hard to hold on.

But if you’re able to the opposite, or at least buy on the lows (no one when the bottom’s in till its bottomed!) then your portfolio stands a seriously good chance of doing well. You’ve just gotta be patient and be prepared for anything that comes your way cuz in a bear market there are often more lows than that which you’ve bought at, so don’t try to time a single thing.

Dollar-cost average your way through this mess and you can add a chunk more in these gloomy months – only if you’re feeling brave and up for a cheeky bargain.

The hard choices are often the better ones. 

No one ever got rich by following the crowd. 

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.