No time to buy or sell shares
September is here once again, and yesterday equities on both sides of the Atlantic fell sharply but, as it is my first, what does it mean for the virgin trader. Should I jump in with both feet or sit cautiously on the side and see how the chips fall?
From everything I have read about the stock market it seems that, historically speaking, September is a **** time to dip your virgin toe into the markets.
If we take any notice of history as a guide to the future, then September is traditionally the worst month of the year on the stock market and has been since England last won the World Cup back in 1966. ‘Did England ever win the World Cup’ I hear you say. I am not so sure anymore, it seems like a hell of a long time ago. But, I digress. Is it the dark nights drawing in and the barbecues being packed away? Or maybe it’s just post holiday blues? Who knows? This week already seems to be following in the tradition. Apparently the market has taken a September dive 21 times since 1966.
Chris Dillow writing in the FT who is obviously a better man for historical market data than me (perhaps he should be a stock broker) says, “Even if we exclude the three worst Septembers – 1974, 1981 and 2008 – the average return in the month has been just 0.16 per cent. That’s still worse than any other month bar June”.
On the upside September is a good month for shorting, or so I am told. As a virgin I can’t help but suspect there may be more to this September than the usual end of summer blues. Could it be the summer rally is about to hit the buffers? According to chief investment officer for global equities at BlackRock. “There is a growing perception that equities have become overbought and are expensive at current valuations. Many observers have been pointing to the extreme run-up in equity prices over the last six months as a sign that stocks may have come too far, too fast.”
So when is a good time to buy and sell?
December – January
Once again, using history as our guide, December seems to be one of the best months of the year along with January. The strongest week is – wait for it – week 51! Aren’t statistics amazing? There has been only one real decline of any note in the markets at this time since 1981.
And apparently, April is the best month of all!
Virgin
