August: Not Such a Dog Month for Investing After All
Would it surprise you to learn that August – sleepy,slow-moving, dog-days August – turns out to be a strong month for historicalmarket returns? Marketwatch columnist Mark Hulbert analyzed Dow JonesIndustrial Average ($DJIA) performance stats since its inception in the late1800s in a post called WhyAugust Gets No Respect From Investors. To his surprise Hulbertfound that August was actually among the best-performing months of the entireyear. “Its average gain is even better than January’s,” Hulbert writes, “andyet Wall Street celebrates January’s strength by naming a seasonal pattern forit: the January Effect.Yet no one has ever heard of an August Effect. Why not?”
Why not indeed. It seems that recent years have tarnishedAugust’s long-term reputation for investment performance. It’s only in the past60 years or so that August returns have gone south (or, more accurately, flat).But the month’s track record since 1896, according to Hulbert’s analysis, isclearly in the black.
October usually has a fearsome reputation among investorsfor the many noteworthy market crashes that have occurred in that month. YetSeptember is way more treacherous, historically speaking, than its reputationamong investors. Interesting stuff!
Here’s to your August investing – may it fatten yourinvestment returns way more than you’d anticipated. Happy trading to you!
CEO, TradeKing Group
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[image: Eveby Kate Fries on Flickr]
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