While September is the worst month for the stock market (September didn’t fail to end in the red this year either), the last three months of the year are usually the best for the S&P 500. As the above chart shows1, the fourth quarter (October-December) is nearly twice as good as the next best quarter (January-March) of the year.
That being said, the first month in the last quarter of the year has been known for some dark days. There was the Bank Panic of 1907, the Crash of 1929, and Black Monday of 1987. Those days put a bad taste in the mouth of investors and can make October feel as scary as a Halloween horror movie. Remember though: markets can go up or down any day, any month, and any year.
Market history is useful still.
We study history in general not so that we will know what is going to happen in the future with certainty, but to teach us about humanity so we are equipped to live wisely in the present and future. Since we can become better individuals in society by learning from history, we can also become better investors by knowing stock market history. Therefore, we should not get as hung up on the statistics of what the market did based on the calendar alone, but study some of the reasons of why it did what it did.
Will the fourth quarter be the best one of the year? Possibly. But even Tom Brady doesn’t always win in the 4th quarter.