September is usually grim for stocks, but focus on fundamentals

September is traditionally the worst month of the year for stock markets – but this year could be different, says the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The comments from deVere Group’s Nigel Green come as August comes to a close hailing the end of summer for those in the Northern Hemisphere, and as investors revise and adjust their portfolios as we move into the most critical time of the year to lock in gains.

He says: “February and September are both historically bad months for stock markets, but September is usually worse.

“There are different suggestions as to why this is the case. For instance, some insist it is because investors are selling-off to secure some capital for the year; some say it’s down to funds paying out, encouraging selling for tax reasons.”

However, the deVere boss believes this year might be different.

“Stock markets had an unusually rough first half of the year and much of the major disruption has already taken place and future jolts priced-in.

“In addition, we expect higher than usual institutional investor activity – supporting prices – due to the current lower valuations. They’re thinking ahead to what is going to happen, not what has already happened.”

Nigel Green says individual investors should be taking advantage too in the same way.

“There are some important long-term opportunities right now with high upside potential and low-risk possibilities. But you must buy wisely in this current volatile environment.

“You should bear in mind that long-term and short-duration assets respond differently to rising inflation and interest rates.”

He goes on to say that, as ever, certain sectors will do better than others in the coming months. “These include energy, financials, healthcare and pharma.”

Despite his generally bullish sentiment of the so-called ‘September Effect,’ the deVere CEO also issues a warning.

“There are many headwinds ahead for the rest of this year that could impact investor returns.

“One of the biggest – and most overlooked – is the rising risk of large-scale social unrest.

“The global cost of living crisis is the major contributing factor. When people can’t feed their families, get to work or take their kids to school due to high fuel prices, or heat their homes, it’s an almost inevitable recipe for large-scale civil unrest.”

He concludes: “Investors should ignore the noise about The September Effect and focus on fundamentals.”