Stock Market CRASH THIS MONTH ?!? | September - Historic Worst Month | Summary and Q&A

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September 3, 2022
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Everything Money
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Stock Market CRASH THIS MONTH ?!? | September - Historic Worst Month

TL;DR

September being the worst month for stocks is a baseless belief; there is no significant correlation between the month and stock market performance.

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Key Insights

  • 🫨 Believing that a specific month determines stock market performance is irrational and akin to believing in superstitions.
  • ⛔ The only major crashes in history were not limited to September, undermining the notion of September as a crash-prone month.
  • 💐 Investing based on fundamental analysis, such as evaluating cash flow and balance sheets, is a more rational and effective strategy than following month-specific trends.
  • 🖐️ Emotional intelligence and mindset play crucial roles in successful investing, as demonstrated by renowned investors like Warren Buffett and Charlie Munger.
  • 💐 Building a diversified portfolio with ETFs can provide a solid foundation for investing, while gradually gaining confidence to invest in individual stocks.
  • 🫰 Professional fund managers often underperform compared to broad market indexes, making self-directed investing a potentially more profitable approach.

Questions & Answers

Q: Is September truly the worst month for stocks?

No, it is a baseless belief. There is no concrete evidence to support the claim that September consistently performs poorly in the stock market.

Q: How many times has September witnessed a decline in the stock market historically?

Out of the 18 pre-midterm Septembers since 1950, the stock market fell in 11 instances. However, this does not establish a reliable pattern or prove the link between September and market performance.

Q: What are some notable crashes that occurred in months other than September?

Major crashes, such as the financial crisis of 2007 and the stock market crash of 1929, did not occur in September. This contradicts the notion that September is a month prone to crashes.

Q: What factors should investors focus on instead of month-specific trends?

Investors should prioritize fundamental factors such as cash flow, balance sheet strength, and paying a reasonable price for future cash flow. These factors have proven to be more reliable indicators of long-term investment success.

Summary & Key Takeaways

  • September's negative reputation in the stock market is unfounded, as there is no logical reason why a specific month would consistently impact investment outcomes.

  • Historically, there have been instances where the stock market declined in September, but these isolated incidents do not prove a direct cause-and-effect relationship.

  • The key to successful investing lies in focusing on fundamental factors, such as cash flow and balance sheets, rather than superstitious beliefs tied to specific months.

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