Insights + Resources

The September Market Weakness Effect

Sep 10, 2021

September Market Weakness
Investors ending their fiscal year can lead to some market weakness

The stock market notched its 7th straight month of gains in August, and the Standard & Poor’s 500 index has set 53 new highs so far in 2021.But stormy clouds may be on the horizon as we roll into the September market weakness effect.

During August, stocks rallied as investors looked past the increased number of COVID-19 Delta  variant cases and barely reacted when the Federal Reserve said it might begin tapering its monthly bond purchases by year-end.

But it’s a new month, and you should expect to see an article or two about what’s called the “September Effect.” September is when many professional investors end their fiscal year, which can lead to some overall market weakness.2

When I see articles about the September Effect, I’m reminded of my favorite stock market quote by Mark Twain.3

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”

There’s always going to be some market theory, opinion, or model that suggests we’re in “this cycle” or “that trend.” Over the years, we’ve found that the best strategy is to ignore the noise and focus on your investing goals.

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