Welcome to September. The month in which we celebrate labor, we send our kids back to school and, yes, the start of Fall. Oh, and while you’re rejoicing, let me warn you that September is also, historically, the worst month of the year for stocks.
That fact isn’t meant to scare you. I haven’t suddenly become a snake oil salesman selling fear and greed. No, I simply want you to be the best-informed investor on the block.
October gets the bad rap as the worst month because we’ve lived through some awful Octobers. In 1987, October 19 brought Black Monday, when 500 Index (VFINX) fell 20.5% in a day—yes, I said “day,” not “year.”
Then, during the Great Financial Crisis of 2008–2009, 500 Index fell 16.8% in October 2008—the worst month of that bear market.
While this may sound dismal and portentous, the fact is that October hasn’t been the worst month of the year for investors. For all the headline-grabbing Octobers, 500 Index has, since its 1976 inception, gained 0.9% on average during the month. That’s nearly spot on with the index fund’s average return of 1.0% across all months.