Welcome to the Worst Month

September has the worst average equity returns of the year


September has the unflattering claim of the worst month of the year for stock returns. There are several theories as to why this is the case, but the assertion is true. It is so well-known it is called the September Effect.


Many sources cite lengthy historical data indicating September has the worst average return. Since 1928, the S&P 500 has averaged a 1% decline. Over the last 25 years, the S&P 500 declined 0.7%, on average. The table below shows the average monthly returns for the Russell 1000, Russell MidCap, and Russell 2000 indices since 2000.


Table of average monthly returns for Russell 1000, Russell MidCap and Russell 2000

Source: S&P Global, Jackson Creek Investment Advisors


The large cap R1K has seen a decline of only 0.27% in September over the last 22 years. August is the only other month with an average below zero in the large cap index. Mid cap stocks have fared worse. The Russell MidCap Index has lost 0.39%, on average, since 2000 during the month of September. October also has a very small negative average. There are three months with negative averages in the Russell 2000. They are Oct (-0.65%), Aug (-0.12%), and Sep (-0.02%). Based on this data, September is the third worst.


Overall, the August-to-October period has not been the kindest over the last two decades. Of course, averages do not tell the whole story and each year is different. Whether September 2022 goes along with the average or bucks the trend is not something we are going to predict. The first day of the month is not off to a good start, though.

Back