28 Aug COTW: The September Effect
- Seasonal trends in stock market performance refer to the patterns or beliefs that certain times of the year may influence the performance of the stock market. Despite short-term fluctuations and seasonal trends, the S&P 500 has delivered high-single-digit annual nominal returns for almost a century. From 1920 onwards, the median annual return of the S&P 500 ranges between 10% and 20% and despite markets often fluctuating during a year, the overall trajectory remains upward over the long term.
- While July has historically been a top-performing month, September has historically been one of the worst-performing months, particularly over the last two decades. Referred to as the “September Effect,” this phenomenon reflects a tendency for stocks, notably the S&P 500, to exhibit poor performance during September. The most notable declines occur within the initial half of the month, with an average drop of 5.7%.
- With September just around the corner and considering the recent market cooling observed over the past month, the question is whether this year’s September Effect will once again demonstrate its historical accuracy…
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