Key Points
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There’s not much to do about the “September Effect,” unless you sell out of stocks.
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That introduces other problems, which investors would do best to avoid.
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Staying the course is the best move for most investors.
- 10 stocks we like better than S&P 500 Index ›
Here we are in September. It’s back-to-school month for millions of kids. Summer will give way to fall around Sept. 23. Some leaves in your region may have begun to change color. For many reasons, including cooler temperatures, we often look forward to or enjoy September. But many investors actually dread it.
Statistically speaking, September tends to be a lousy month for the stock market. According to Dow Jones Market data (as of 2025):
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- The Dow Jones Industrial Average DJIA has averaged monthly declines of 1.1% in Septembers going back to 1897, with declines in 57.8% of Septembers.
- The S&P 500 index (SNPINDEX: ^GSPC) and the tech-heavy Nasdaq Composite index (NASDAQINDEX: ^IXIC) have, on average, dropped by 1.1% and 0.9%, respectively, going back to 1928 and 1971.
- The S&P 500 has finished in the black 44.9% of the time since 1928, while the Nasdaq has posted positive monthly returns 51.9% of the time since 1971.
See? It can seem a little scary. (But note that plenty of Septembers feature increases!)
Image source: Getty Images.
Should you worry about “the September Effect”?
I’m not worrying about what’s going to happen to my stocks in September, and I don’t think you should, either. Why? Well, because what can you do about it? You might sell many or all of your stocks now, waiting for October, but that’s market timing — which doesn’t have a great track record, either.
Here’s what a 2025 report from Vanguard has said about market timing:
- “Bull market surges have been longer and stronger than the bear markets that preceded them.” So getting out of the market at a downswing can mean missing some or much of a big upward run.
- “Timing the market is futile; the best and worst trading days often happen close together.” If you sell on one day, the market might surge over the next few days, leaving you on the sidelines.
Larry Fink, CEO of BlackRock, the world’s largest money manager, agrees, saying in a recent annual letter to shareholders:
Over time, staying invested has mattered far more than getting the timing right. Over the past two decades, every dollar invested in the S&P 500 grew more than eightfold. Miss just the ten best days, and you would have earned less than half. And some of the market’s strongest days came amid the most unsettling headlines.
Selling stocks now means you may face taxable capital gains, and if you sold stocks you actually believe in and want to buy back, you’ll have to wait more than 30 days to avoid a “wash sale.”
All these are reasons why I’m not selling any stock because it’s September. Some folks could reasonably sell some stocks for other reasons, though, such as if they’re approaching retirement and shifting their asset allocation — or if they just need to generate some cash.
Volatility is simply a part of the stock market. The market will correct or crash on occasion, and there will be recessions. For best results, aim to hold on to your great stocks for years, if not decades, through Septembers and Octobers, and all the other months.
And should the market drop in September, you might actually want to go shopping for discounted shares of great companies.
Should you buy stock in S&P 500 Index right now?
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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BlackRock. The Motley Fool has a disclosure policy.
