Happy Autumn! I love the Fall. The clear, crisp mornings and chilly nights. Also, the stock market drags itself out of the summer doldrums. But, is there really such a thing? Well, possibly. Trading volumes in the summer months are definitely lighter than the rest of the year as people are off enjoying their vacations. But, more importantly to us, how does the market perform?
Taking a look at the S&P 500 returns by month from 1950 through 2014, September has the worst average annual return at -0.65%*. Conversely, December has the best average annual return at 1.54%*. There is not one clear answer as to why this is. And, as with most things in economics and financial markets, it’s probably a mix of many different elements. However, it is interesting to ponder.
From a money flow point of view, it makes sense that September is a down month. Very generally speaking, if money flowing into the market represents buying, then the summer months, with lighter volumes, would have less upward pressure.
Also, September 30th is the end of the fiscal year for many mutual funds. This means that they may be looking to sell losing positions in September for tax purposes and window dressing. Window dressing is when funds reduce or eliminate poor performing positions so that they don’t appear in their portfolio.
But what about the upside? December is not the most obvious candidate for best performer. With the Holidays in full swing, it’s hard to imagine that people are focusing too much on their investments. Between parties and presents and family, there are plenty of distractions. Perhaps it’s because of the optimism of the season, or the year end planning that takes place.
October is widely thought to be a tough month for investing. However, the numbers do not reflect that. With an average annual return of 1%**, it ranks solidly in the middle of the months. This, despite a drop of 16.94% in 2008^ (during the Great Recession) and a drop of 21.76% in 1987^ (Black Monday).
So, what does this all mean? Not a whole lot really. While September is the worst month on average, it is not always the worst month. And, it is impossible to say how any single month will do. Or any single day, week or year for that matter. What’s important is to have a portfolio that is allocated appropriately for you. Trying to time the market based on the months of the year would be foolish, in my opinion. Because, as always, your best chance for making money in the stock market is by investing for the long term.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
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A Financial Advisor registered through CUSO Financial Services, L.P., Gavin has 25 years of experience as an advisor in the Puget Sound area.
“I believe every client is unique and deserving of a personalized financial plan that will help them reach their individual financial goals. Before I make any recommendations, I like to get to know my clients. By asking the right questions, and developing an honest, trusting relationship, I can really get a sense of what’s going to work best for them.”
Gavin graduated from the University of Washington with a BA in Business Administration and started his financial career with US Bank in the Investment Department. Prior to joining Verity in 2006, he spent eight years with Piper Jaffray.
So what is Gavin’s vision for his dream retirement?
“My dream retirement would be absolutely worry free: financially, emotionally, and in every aspect of life. My finances would be in order so expenses for travel, luxuries, and gifts for the kids, grandkids, and great-grandkids would be taken care of. My kids would be financially sound, so I would be confident in their prosperity. This would give me the freedom to travel and play and do whatever it is I want to do.”
When Gavin’s not working, he enjoys spending time with friends and family, watching Husky football and taking weekend trips around the Northwest.
Gavin is registered to transact securities business in the states of AZ, CA, CO, FL, HI, ID, IL, KS, MN, NV, NY, OR, UT, VA and WA.
*Non-deposit investment products and services are offered through CUSO Financial Services, LP (“CUSO Financial”) (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CUSO Financial. Verity Credit Union has contracted with CUSO Financial to make non-deposit investment products and services available to credit union members. Atria Wealth Solutions, Inc. (“Atria”) is not a broker-dealer or Registered Investment Advisor and does not provide advice. CUSO Financial is a subsidiary of Atria.
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