September has historically been a weak month for the S&P 500 and the Dow, with both indexes averaging monthly losses stretching back decades. Yet selling now to dodge the pattern carries its own costs, from taxes to missed rebounds, and most investors are better off staying put.
The September numbers
The Dow Jones Industrial Average has averaged monthly declines of 1.1% in Septembers since 1897, falling in 57.8% of those months, according to Dow Jones Market data. The S&P 500 has averaged a 1.1% drop each September since 1928, finishing higher only 44.9% of the time, while the Nasdaq Composite has averaged a 0.9% decline since 1971 and posted gains in 51.9% of Septembers.
Those figures can look alarming on their own. But plenty of Septembers still post gains, and the averages say nothing about what any single month will bring.
Why staying invested beats timing the exit
A 2025 Vanguard report found that bull-market surges have been longer and stronger than the bear markets that preceded them, so an investor who exits during a downswing risks missing much of the next upward run. Vanguard also noted that the best and worst trading days often cluster close together, meaning a sale meant to avoid losses can just as easily lock an investor out of the rebound.
Larry Fink, chief executive of BlackRock, made a similar case in a recent letter to shareholders. According to Fink: "Over time, staying invested has mattered far more than getting the timing right." He added that every dollar invested in the S&P 500 over the past two decades grew more than eightfold, while missing just the ten best days would have cut that return by more than half.
The cost of selling now
Exiting positions ahead of a historically soft month also carries a tax bill: investors who sell winners now may owe capital gains, and anyone hoping to buy the same shares back has to wait more than 30 days to avoid triggering the wash-sale rule. Volatility is simply a part of the stock market, and corrections or recessions will happen on occasion regardless of the calendar.
Holding great companies through September, October, and every other month has historically mattered more than dodging a single weak stretch.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
