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September: Weakest Month In US Market History

  • Written by Syndicated Publisher No Comments Comments
    September 3, 2013

    At the threshold of September, let’s take a quick look at performance of this month in market history. Over the long haul, September has been the weakest of the 12 calendar months. To illustrate the point, I’ll use the Dow monthly closes as our proxy for the US market and the year 1900 as our starting point. There have been 112 September Dow closes since 1900, one for every year except 1914, when the outbreak WW I in Europe prompted a four-month shutdown of the US markets.

    The adjacent table shows the average performance for the calendar months over this timeframe. The overall average monthly close has been a gain of 0.54%. September is one of three months with a negative average and by far the worst, with its -1.04% average.

    The column of absolute averages (the percent change from zero) gives us a sense of the relative volatility of the monthly closes, which averages 3.85%. At 4.17%, September is a bit more volatile than the average, but the spread from the least volatile month (February) to the most volatile (November) is only 1.34%.

    Ultimately the monthly averages tell us very little about the historical record. What’s more revealing is a snapshot of the range of closes, shown below from low to high. I’ve also highlighted the 5.83% standard deviation for this series.

     

     

    The chart above gives us a good sense of the extreme range of values, but what about the chronology of the data points and the distribution of those outliers? The next chart gives a visualization from which you can draw some conclusions.

     

     

    We begin September of 2013 after a disappointing -4.45% August close in the Dow. The last time we had a negative August Dow was two years ago in 2011, when -4.36% was followed by an even worse-6.03% in September.

    In contrast, the year before that, in 2010, August closed at -4.31% but was followed by a most welcome7.72% rally in September. Let’s hope our current September takes its 2010 predecessor as a role model.

    File this commentary under “market trivia”.


    Note: Based on data from the FRED repository for the Dow Jones Industrial Average

    Images: Flickr (licence attribution)

    About The Author

    My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.

    My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.

    Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.

    Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool article attests.

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