September losses

[Razorback60]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

[bobn60014]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

My crystal ball is fuzzy right now.

[prd1982]

Not sure where you are reading about a sure loss in September, but stop reading the source. No one knows what will happen

[cheese_breath]

I assume you mean they'll decline a little in value because dividends are paid from them. In that case, just reinvest the dividends back into them.

[Sandtrap]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

to op:
where does this info come from?
Can you provide a source and link?

j

[Silk McCue]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

Your investment strategy should be for years and decades. Ignore the noise and continue to learn and ask questions here rather than from articles you come across or things that you hear from others.

Trying to time the market is a great way to undermine your financial future.

Cheers

[Razorback60]

Just looking at past history of September for the last 4 years

[Razorback60]

@Silk Mccue thanks for the great advice. @KingRiggs sorry for ruffling feathers. I was just asking a question, as I'm not as well educated in investing as most on here. From now on I will just read topics on the site and not post

[Nicolas]

It used to be in October, if it happens, but in recent years has creeped up to September as people became more aware and try to anticipate. There’ve been some famous October declines after all. But it’s by no means a given. You’re likely to lose more money than to preserve it if you try to follow the calendar. Just stay fully invested and ride through the periodic slumps. There’s a famous quote about this by Mark Twain you might remember.

[KlangFool]

@Silk Mccue thanks for the great advice. @KingRiggs sorry for ruffling feathers. I was just asking a question, as I'm not as well educated in investing as most on here. From now on I will just read topics on the site and not post

No, you should post. Or else, you would not know what you do not know.

1) Let's start with the basic.

2) My asset allocation is 60:40 60 percents stock and 40% bond.

3) If in the September, the stock drops, I will buy stock with my new money.

4) If in the September, the bond drops, I will buy bond with my new money,

5) So, please explain to us why do you think you need to do something with your existing holding?

KlangFool

[Razorback60]

Thanks @KlangFool. I was operating under the assumption that if I took a percentage and placed in a 5.4% CD that it would help offset a Sept/Oct correction if it came and then I could buy additional funds at a lower cost with that money in November. Perhaps that is flawed and I just need to sit tight and ride out any correction.

[KlangFool]

Thanks @KlangFool. I was operating under the assumption that if I took a percentage and placed in a 5.4% CD that it would help offset a Sept/Oct correction if it came and then I could buy additional funds at a lower cost with that money in November. Perhaps that is flawed and I just need to sit tight and ride out any correction.

Razorback60,

My question to you is why do you think that will work better than just stick to your percentage asset allocation?

If you maintain a fixed percentage allocation like 60:40, you will always "Buy Low and Sell High". So, why do you need to think about what happened at any time? You will buy whatever is on sale with your new money. Aka, buy low.

And, if either the stock or bond goes up too high, you will sell one of them to buy another. Aka, sell high by rebalancing to your percentage allocation.

KlangFool

[sambb]

Sitting tight and riding out a correction has worked for every correction in history.

However, if you can time the market correction AND get back in at the low, then you will do far better. Unfortunately, no one can really time the market despite most people thinking they can. In retrospect it is easier than it is looking forward. The COVID crash and recovery are good examples in recent memory. Staying the course has some regret to inexperienced investors when the market goes down, because they feel that they couldve timed the market. And the other problem with staying the course, is a long flat market or downtrend (Look at china market last 15 years or Japan in the 80s-2010s). Ultimately staying the course takes a lot of mental fortitude if you get nervous about downtrends. Of course the worst is selling at the low and not getting back in.

Stay the course is a LONG term strategy (10-40 year strategy), and it takes a long term view of the future. Short term views are never going to work with a long term strategy, and short term is not only months, but it is also a few years sometimes.

Good luck.

[Rocinante Rider]

Thanks @KlangFool. I was operating under the assumption that if I took a percentage and placed in a 5.4% CD that it would help offset a Sept/Oct correction if it came and then I could buy additional funds at a lower cost with that money in November. Perhaps that is flawed and I just need to sit tight and ride out any correction.

Keep posting and keep learning Razorback60. All of us have gone through steep learning curves, and often paid the price for our past ignorance.

As to the theory about predictable Sept/Oct corrections, yes that is flawed. If it were that simple, everyone would know and follow it (which perhaps would turn into a self-fulfilling prophesy ). With time, you may learn to absolutely ignore all of the prophesies, pundits, prognosticators, "experts," market analysts, financial media, etc.

Given that no one can reliably predict the future of the markets, “Effective investing can be incredibly simple: Create a simple, diversified asset allocation plan. Invest a part of each paycheck in low-cost, no-load index funds according to your plan. Check your investments periodically, rebalance when necessary, then stay the course.” (From: The Bogleheads’s Guide to Investing)

[coachd50]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

So- based on your question, one thing that will help you on your journey is to realize that “nobody knows anything” and also “everyone knows everything “ when it comes to investing. Nobody knows anything about what will happen in the future, BUT everyone knows EVERYTHING when it comes to information available (unless you are a US congress person and can trade on insider information).

To apply this to your example, nobody “knows” what will happen in September. However lets say your concern about a decline in September was an immutable fact. Then “everyone “ else would know that too- and as such would gave already made decisions accordingly correct? Therefore you can’t really benefit from it because that event would already be “priced in” as they say.

In order to take advantage of such things- you have to know something that others don’t. What makes things hard is that often with the benefit of hindsight, people trick themselves into thinking “oh i knew that was going to happen” and feel empowered to speculate in the future. That can end badly. If you want to speculate- visit your local casino.

[biscuit5]

OP may be referencing the September Effect

https://www.investopedia.com/terms/s/se ... effect.asp

The September Effect refers to the historically weak stock market returns observed during the month of September.
In fact, September has been the worst performing month, on average, going back nearly a century.

[RyeBourbon]

OP may be referencing the September Effect

https://www.investopedia.com/terms/s/se ... effect.asp

The September Effect refers to the historically weak stock market returns observed during the month of September.
In fact, September has been the worst performing month, on average, going back nearly a century.

But it doesn't mean it will be a down month this year.

[upwind]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

Absolutely! Which years is uncertain.

[arcticpineapplecorp.]

OP may be referencing the September Effect

https://www.investopedia.com/terms/s/se ... effect.asp

The September Effect refers to the historically weak stock market returns observed during the month of September.
In fact, September has been the worst performing month, on average, going back nearly a century.

more from the article:

Understanding the September Effect

From 1928 through 2021, the S&P 500 index has averaged a decline during the month of September.1

Stock Trader's Almanac. "September Almanac: Worst Month of the Year since 1950."
This is, however, an average observed over many nearly a century, and September is certainly not the worst month of stock-market trading every year. In fact, for some years September has been among the best-performing months. Moreover, while the average return for September is negative, the median return for that month has turned positive...

For instance, if an individual had bet against September over the last 100 years, that individual would have made an overall profit. If the investor had made that bet only since 2014, though, that investor would have lost money.

so for the OP, you're dealing with some recency bias if you're looking only at the past 4 years. You can see from mthe article above, over the past 14 years you would have lost money if you left the market in September.

Stay the course.

You don't have to try to time the market.

It's time in the market, rather than timing the market, that matters.

[arcticpineapplecorp.]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

also, 3 month CD won't pay out 5.4% of your deposit if that's what you're thinking. That's what you would earn if you earned that rate over the course of the year.

see for yourself:
https://www.nerdwallet.com/calculator/cd-calculator

put in 10,000 (default), 5.4%, 3 months

you get $132.35 (1.325% over those three months)

you don't get $540 in case that's what you thought you would.

did you?

[Jeepergeo]

That is market timing and market timing is antithetical for most Bogleheads.

[Hacksawdave]

October used to get the biggest attention as larger historic drops happened in that month versus September’s more consistent softness. I have always looked at it differently and just ignore noise.

I have three of the same one-pound steaks. In August it was $20, in September it was $18, and in November $22.

Or for those with monthly DCA:

I have three $20 steaks. In August it was a full pound, in September it was 1.2 pounds and In November 14 ounces.

Now, which steak tasted better?

[sailaway]

You were supposed to sell in May to prepare for the drop!

[White Coat Investor]

Just looking at past history of September for the last 4 years

That seems like a savvy way to invest. Surely this September will be exactly like the last 4. Sounds like a variation of the debunked "sell in May and go away" theory.

[Hacksawdave]

You were supposed to sell in May to prepare for the drop!

Oh no, use the ‘super bowl indicator’ instead because it is touted as guaranteed.

After all, when the Denver Broncos won it in 1998 and 1999 the markets, um well…. Okay the Rams finally won in 2000 and the NASDAQ um….. Okay when the Giants won over the Patriots in 2008 the markets umm…. Okay, never mind.

/s

[MathWizard]

If I absolutely knew that my equities would lose in September, I would leverage to the hilt and shirt those stocks.

Of course, I'm not going to do that because I don't know what will happen in September.

If you are so concerned, perhaps your allocation to equities is too high.

[BolderBoy]

OP may be referencing the September Effect

https://www.investopedia.com/terms/s/se ... effect.asp

The September Effect refers to the historically weak stock market returns observed during the month of September.
In fact, September has been the worst performing month, on average, going back nearly a century.

People who want to invest according to the September Effect may want to also invest according to the Monday Effect.

https://www.investopedia.com/terms/m/mondayeffect.asp

[livesoft]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

Sure. Take an expensive vacation to Alaska in September, but pay in advance in August by selling $50,000 of your investments.

[Raspberry-503]

I know someone that only buys on Fridays at 10:30 because they believe that historically the stock dips Friday mornings.
Investopedia also talks about the October Effect...

if the stock market dips in September, I'll be buying at a discount that month, so I'm good with that.

[Rocinante Rider]

OP may be referencing the September Effect

https://www.investopedia.com/terms/s/se ... effect.asp

The September Effect refers to the historically weak stock market returns observed during the month of September.
In fact, September has been the worst performing month, on average, going back nearly a century.

People who want to invest according to the September Effect may want to also invest according to the Monday Effect.

https://www.investopedia.com/terms/m/mondayeffect.asp

There's also a 0.99 correlation between the opening price of the S&P Global and the number of bachelor degrees awarded in military technology. If you torture the data long enough it will confess to anything.
https://tylervigen.com/spurious/correla ... tock-price

[Harmanic]

Just looking at past history of September for the last 4 years

"Sell in May and go away" is a common saying. May was phenomenal this year. Chartists are no better than Voodoo priests and palm readers.

[Hacksawdave]

OP may be referencing the September Effect

https://www.investopedia.com/terms/s/se ... effect.asp

The September Effect refers to the historically weak stock market returns observed during the month of September.
In fact, September has been the worst performing month, on average, going back nearly a century.

People who want to invest according to the September Effect may want to also invest according to the Monday Effect.

https://www.investopedia.com/terms/m/mondayeffect.asp

Interesting as I noticed a ‘Monday effect’ back in 2013, but it was just the opposite of what was coined 40 years earlier in 1973. After a down week the traders would stage a ‘Hope rebound dead-cat bounce’ that would last through Wednesday and turn into losses by Friday. If the markets dropped on Monday, it would mostly lead to a positive week.

2013 was a good year, and I was quite miffed when the CNBC contributor complained about not having an ‘Up Monday’ in six weeks.

[tibbitts]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

There are seasonality theories, and you can certainly follow whichever one you prefer. But you can't follow them one year and not the next, even if they don't work out the first year or two etc. Choose one to try and come back after a few decades to let whoever is here then know how it worked out.

[KyleAAA]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

How could anybody possibly know this?

[Raspberry-503]

ah, I knew this rang a bell, user kinless ran an "experiment" last year, trying to sit our September. Arguments and results in the thread below
viewtopic.php?t=409844

I don't endorse sitting out September by pointing out to this thread, just shows that the OP is not the first one to think about it.

[rockstar]

My Delorean is in the shop. Doc is working on it.

Let’s get back to September and see what happens then.

[muffins14]

I know someone that only buys on Fridays at 10:30 because they believe that historically the stock dips Friday mornings.
Investopedia also talks about the October Effect...

if the stock market dips in September, I'll be buying at a discount that month, so I'm good with that.

They are silly. It is like looking at the sky and buying stocks based on the shape of the clouds

[gavinsiu]

OP,

Your plan is probably not a good idea mainly because you are trying to time a possible stock market fall and trying to cushion it with a CD. This sort of short term thinking ia really bad for the long term return. You will be cosntantly trying to fiddle with your portfolio, trying to maxmized gain while minimizing loss but since no one can time the market, you will just get subpar return.

Not sure how long you have till retirement, but if you have a equity heavy portfolio and regularly contribute to your 401K, then if the market dips in September, your regular contribution will buy more shares. Just concentrate on contributing regularly on an allocation you setup and making sure that you get th matching for each paycheck, then concentrate on making more money at your work.

[the_wiki]

Hi Bogleheads- Quick question. Is it a given that my equities, mutuals and ETF's will lose money in September and is there anything I can do to offset some of that? 3 month CD at 5.4% given? Thanks in advance

Is it a given? No.

[suemarkp]

There are many anecdotes about the market. The sell in may and go away that has been mentioned (and buying back in september). This is an election year, so there are theories that the government wants to keep the economy booming in the run up to the november election so they get re-elected.

These are typically based on common past behaviors. The sell in may one was because all the stock traders would take summer vacations and not much trading would be going on. But now days, you don't need a broker and can trade from your phone, so if broker vacations was the mechanism that won't happen anymore. Elections are a little tougher, but I think people give the government too much credit for manipulating markets. I think there is only so much they can do (e.g. federal reserve rate cut). Much is driven by actions and events and computer algorithms that watch those, and those that control a lot of shares to make the needle move.

The best solution for a blip is to ride it out, because even if you know it will be in september, you don't know the day. You could miss out on a week of gains, or the blip could occur sooner and it drops before you can sell. Drops that happen and are short duration are a good think if you have money to buy shares during the drop. The only problem there is you don't know how long a drop is going to last. Is it month or two blip, or the beginning of a 3 year downturn... Either way you should buy (or rebalance) during a drop. Just keep buying again if the drop continues.

[Hacksawdave]

They are silly. It is like looking at the sky and buying stocks based on the shape of the clouds

In the 90s I lived in the OC, and the county tax collector-treasurer relied upon astrology and psychics for bonds and interest rate predictions. It led to the then largest municipal bankruptcy at the time.

[RyeBourbon]

Just looking at past history of September for the last 4 years

"Sell in May and go away" is a common saying. May was phenomenal this year. Chartists are no better than Voodoo priests and palm readers.

I call them alchemists.

[arcticpineapplecorp.]

I think you mean October, not September. At least that's what financial expert Samuel Clemens said:

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” ― Mark Twain, Pudd'nhead Wilson

[Nicolas]

I think you mean October, not September. At least that's what financial expert Samuel Clemens said:

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” ― Mark Twain, Pudd'nhead Wilson

It was October but because people try to anticipate it they sell in September now. In future years it may creep to August and then July.

[arcticpineapplecorp.]

I think you mean October, not September. At least that's what financial expert Samuel Clemens said:

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” ― Mark Twain, Pudd'nhead Wilson

It was October but because people try to anticipate it they sell in September now. In future years it may creep to August and then July.

sounds like what happened to the ol' Foolish Four (no more).

[bh1]

I think you mean October, not September. At least that's what financial expert Samuel Clemens said:

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” ― Mark Twain, Pudd'nhead Wilson

It was October but because people try to anticipate it they sell in September now. In future years it may creep to August and then July.

Wait long enough and the answer is to sell in September. It was right all along!

[Nicolas]

I think you mean October, not September. At least that's what financial expert Samuel Clemens said:

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” ― Mark Twain, Pudd'nhead Wilson

It was October but because people try to anticipate it they sell in September now. In future years it may creep to August and then July.

sounds like what happened to the ol' Foolish Four (no more).

As soon as people discover a pattern it ceases to exist.

[OKOKOK]

Curious if anyone has seen an on-line back tester than could answer the question -
S&P and relax vs. S&P, sell Aug 31, buy it back Oct 1.

[Silk McCue]

Curious if anyone has seen an on-line back tester than could answer the question -
S&P and relax vs. S&P, sell Aug 31, buy it back Oct 1.

That would be a fools errand. The stock market doesn’t know calendar date returns. Especially for one that hasn’t happened yet.

Cheers

[OKOKOK]

Curious if anyone has seen an on-line back tester than could answer the question -
S&P and relax vs. S&P, sell Aug 31, buy it back Oct 1.

That would be a fools errand. The stock market doesn’t know calendar date returns. Especially for one that hasn’t happened yet.

Cheers

Reread my post. I ask about back testing, not forecasting.