The Worst Part of the Investing Year

Today is September 6 which has historically been the worst time of the year to invest. Let me back up and say that this is based on 120 years of the Dow so using that advice for one particular year is not a good idea.

The bad luck stretches from September 6 to October 29, a total of 53 days. Over that time period, the Dow has lost 2.31%. Of course, that’s not much of a move, but in 120-year averages, that’s a lot. The Dow’s average annual gain is 7.3% so you can see how that 53-day loss cuts into the long-term average.

Why has this pattern existed? I think there’s probably a natural reaction to take back some of the gains accrued over the summer. The data has also been impacted by extreme years such as 1929 and 1987.

Here’s what the Dow’s average year looks like. I smushed 120 years’ worth of data into one year and set it to 100 on January 1.

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To be clear, I don’t invest based on these seasonal effects. I merely think they’re interesting for their own sake.

Posted by on September 6th, 2016 at 10:59 am


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