If you've turned on the news around Labor Day in any of the last several years, you've probably heard some version of this: September is the worst month for the stock market. It shows up like clockwork, right alongside back to school sales and the first hint of fall in the air.
Here's the strange part. The people repeating it aren't wrong, exactly. The statistic really does hold up, September has posted the weakest average return of any month, going back a long way. What's worth questioning isn't the number. It's what we're supposed to do with it.
A Fact That Doesn't Mean What It Sounds Like
Averages are tricky things. They can be perfectly true and still tell you almost nothing useful about what's coming. Plenty of Septembers over the decades have been fine, some have even been strong. The month's bad name really comes down to a handful of rough stretches spread across a hundred years of history, and none of those gave anyone a warning ahead of time.
So even in a world where September really was destined to be soft every single year, what would that actually mean for you? Sell everything at the end of August and buy back in October, hoping you time both moves correctly? That's not playing it safe. That's turning one decision into two, doubling your chances of getting it wrong, adding a tax bill you didn't need, and risking missing one of those sudden upward moves that tend to arrive without any warning at all and do a lot of the market's real work over time. Researchers who study investor behavior keep landing on the same finding. Most of the difference between what the market actually earns and what investors actually take home comes down to decisions exactly like this one.
What You're Really Holding
It helps to remember what a stock actually is. When you own shares in a company, you're not holding a symbol that blinks red or green on a screen. You own a small piece of an actual business, one that's opening its doors, serving customers, and trying to grow, on a random Tuesday in September just the same as any other day of the year.
This gets at something bigger than just this one month. There's a real difference between being an owner and being a lender with your money. A lender agrees to a fixed return and lets someone else keep whatever upside comes later. An owner takes on a little uncertainty along the way in exchange for a real stake in how a business, or a whole economy, grows over time. Looked at across a long enough stretch, ownership is what has kept up with inflation, funded people's retirements, and left something behind for the next generation. Nobody has ever built lasting family wealth by parking their money at a fixed rate and jumping in and out based on what month it happens to be.
Patience Is the Whole Strategy
Trying to outsmart the calendar feels clever. It has the appeal of insider knowledge. But markets don't reward cleverness nearly as well as they reward simply staying put. Someone who held on through every one of the last fifty rough Septembers, quietly reinvesting along the way, didn't just get through it. Over time, they came out ahead of anyone trying to dodge in and out, and they did it while paying less in taxes and fewer trading costs along the way.
So what should you actually do this September? The same thing that makes sense in any other month. Keep funding the plan you've already built. Reinvest what comes in. Put money to work when it's ready, since the long term doesn't check what month it started counting from. And when the headlines get a little louder than usual, treat that as a test of patience rather than a reason to act.
I wrote a longer version of this on the NW Advisory blog, available here, if you'd like to read the fuller take.
Nathan Oeming is the founder of NW Advisory, an independent registered investment adviser serving families in Oregon's Tualatin Valley. This article is for educational purposes only and is not individualized investment advice.