This Rare Event Could Eclipse September’s Disastrous Reputation

September is historically a terrible, horrible, no good, very bad month for stocks – and Tuesday certainly lived up to the reputation.

Over the past roughly 100 years, stocks have averaged a 1.2% drop in September, making it the worst month for stocks by a wide margin. The past five years have been especially bad for September trading. Since 2019, stocks have averaged a 4.2% drop in the month. And Tuesday was, quite simply, awful. The S&P 500 dropped more than 2% in one of its worst days of the year.

Ouch!

So… September’s a wash, right? Time to sell and come back in October?

Nope. It’s time to buck the consensus and buy stocks in September.

Why?

Because a unique event set to take place in about two weeks could make September the best – not worst – month of the year for investors.

Take Advantage of Recession Worries

Right now, most people are worried about a recession. Those fears make sense. Unemployment rates are ticking higher. Job openings are moving lower. Consumer spending is slowing while consumer confidence is weak. If all these trends continue, the economy could very well plunge into a recession.

But those trends will likely start to reverse course in about two weeks – because a very specific, very powerful, and very rare economic dynamic is set to emerge. 

This mighty dynamic has occurred three times before in the past 30 years. Every time it has, it strengthened the economy and sent stocks soaring higher – even if they were dropping beforehand.

For example, in 1998, the economy was weakening, and stocks were falling throughout the late summer and into the fall. In fact, the S&P 500 dove nearly 20% that summer.

Then, in September 1998, this rare economic dynamic emerged. And from October 1998 to July 1999, the stock market soared almost 50%!

We think a similar dynamic is set to emerge in about two weeks. When it does emerge, we expect it to result in the same outcome it produced in 1998 – a major stock market rally.