5 years after Lehman collapse, banks far from crisis!

A Kansas University study published by the Wall Street Journal has some interesting observation about market behavior in the month of September. It seems, if someone started investing in 1802 and kept his money in stocks only during September, he would have lost more than half of his money by 2006. Doing the same during any other month, the investor would have gained at least 79% during the period! Call it weird or baseless, the 'September effect' as it is called in the US, is not entirely ignored by even the largest fund managers. Explanations for the negative trend in September, are hard to come by. Needless to say, they are even harder to swallow. Striking September events, such as the 2008 collapse of Lehman Brothers and the 2001 terrorist attacks, are partly responsible. But since these are more recent events, one can hardly explain why stocks have fallen in more than 50% of Septembers since 1926. 

On many occasions the impact of the September decline was seen in the month of October. As Mark Twain wrote, "October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February." Rest assured, like most other short term trends, the negativity about investing in the months of September or October, have no fundamental logic. However, it would certainly be worthwhile for investors to be wary of speculative trends.