So far, the bears are getting slaughtered this month.
But history is still on their side.
Stock market performance in the month has been ghastly, and the month has been filled with horrible events, like 9/11.
Why is September so bad?
No one knows. Here’s one theory, though: Because it’s the end of summer, and it’s depressing.
Throughout June, July, and August, it’s easy to dream and forget about our troubles. But it ends so quickly, and September comes crashing at us with cruel reality. We start to hibernate (mentally) or gird our loins for the coming winter. We have to go back to work! Throw in some bad events during the month and it’s easy to see why the month is so miserable.
OK, fine, that’s not particularly persuasive. So what’s your theory? Review the history below, and then share away.
The stock market crash against which all others would be compared against. On September 4, 1929 the market hit an all-time high, but by the end of October 24, 2009 the market was down 20%. Five days later it was down another 11.5%. The rest, as they say, is history.
The violent collapse happened on Black Monday, but the market was especially volatile the preceeding August and September. The Dow opened the month over 2650, dropping over 100 points by the middle of the month, before rebounding by the end of the month. (This was a lot of volatility back in those days.)
We have our Black Tuesdays. The UK had Black Wednesday: September 16, 1992. On that day, the UK had to exit the European Exchange Rate Mechanism due to its suffering economy and aggressive bets against the currency. George Soros famously made $1 billion shorting the Pound on that collapse.
Geeks remember it as the 'Eternal September.' That was when AOL opened up formerly exclusive USENET groups to a flood of floppy disk-wielding newbies, forever ruining the internet for a few elites who hoped to keep the 'net as their exclusive domain. Sad. There was no putting the genie back in the bottle.
Boo. Baseball went on strike in the second half of the season, and the World Series had to be cancelled. It was the one year that the Montreal Expos might have won the whole thing.
The internet bubble peaked in early 2000, but you may have forgotten that the bubblistas made one more run at a spike in August and September. But that was the bulls last stand. From September 2000 to January 2001 the NASDAQ would drop 45%.
8 years ago, the US suffered the worst-ever attack on its soil on 9/11. Following the horrific attacks, the market was closed until 9/17. When the market opened, the Dow opened down over 7%, which at that time was a record-setting decline.
September, 2008: Thus began the crisis that we're still dealing with. The rather eventful month saw the collapse of AIG, Lehman, Fannie, Freddie, and nearly the entire financial system. At the time it seemed like letting Lehman go was the fateful decision, though we now see how minor it was in the grand scheme of things.
So far September hasn't been that bad. If anything, it's been the bears getting slaughtered. But September 1 started very shakey with all kinds of rumours relating to Cerberus, Wells Fargo, ETFs and Swiss Banks. Since then though things have been pretty quiet.