Stocks often drop in September — but many investors shouldn't care

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September is historically the worst month for the stocks of large U.S. companies. But that doesn’t mean investors should sell out of the market.

The seasonal weakness was tied to banking and farming practices before the early 1900s. Nowadays, it's likely entrenched in investor psychology, experts said.September is the only month during that nearly century-long period in which investors experienced an average loss, according to Morningstar. They saw a profit in all other months.

"Starting next week is when it would get a little bit more negative, in terms of seasonality," Yoder said.For example, the 10 best trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions, according to a Wells Fargo analysis published earlier this year.

"It's all just random," said Edward McQuarrie, a professor emeritus at Santa Clara University who studies historical investment returns."Stocks are volatile."Similarly, investors shouldn't necessarily accept market maxims as truisms, experts said.

 

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