A New Report Suggests September Is the Worst Month to Buy Stocks. History Offers a Clear Answer for How to Handle This

The article highlights the “September Effect,” noting the S&P 500 has averaged a 1.13% decline in September historically (1928-2021) and was -4.76% (2021), -9.34% (2022), and -4.87% (2023), though it has been positive recently (+2.02% in 2024, +3.53% in 2025). A study also suggests one-year forward returns from September are among the weakest on a median basis (8.7%), but not dramatically worse on a mean basis (7.9%). J.P. Morgan Wealth Management’s strategist argues volatility and seasonality are not “destiny,” and investors should stay disciplined through any choppiness.

Analysis

This is less a stock-picking signal than a flow setup. The edge, if any, comes from end-of-summer de-risking, benchmark protection into quarter-end, and tax-loss harvesting; that tends to compress liquidity and punish the most crowded, highest-duration names first. In practice, that means any September weakness should show up more in QQQ-style growth baskets and small caps than in cash-generative financials, but the effect is usually transient unless a macro catalyst is already in place.

The bigger point is that calendar seasonality is being crowded out by passive flows, dealer hedging, and systematic volatility targeting. That structurally weakens the old September pattern, so a blanket short on the index has poor expectancy unless it arrives alongside a real catalyst: hawkish Fed surprise, a growth downgrade, fiscal disruption, or an energy shock. In the absence of that, the better trade is dispersion, not beta.

Contrarian view: consensus is treating September as destiny, but the market usually needs a reason to sell off; month-end positioning alone rarely sustains a drawdown beyond 1-2 weeks. If the first selloff is shallow and VIX stays contained, that would falsify the bearish seasonality thesis quickly. For 6-18 months, the calendar has no structural edge; any value lies in tactical hedging around known event windows, not in a directional regime call.

Key Decisions for Investors

• No standalone short SPY on seasonality alone; treat early-September weakness as a buying opportunity for quality large caps unless a macro catalyst appears.
• If hedging is needed, buy 1-2 month SPY put spreads only on a volatility dip; use them as cheap insurance, not as an outright bearish bet. Falsify if VIX re-prices sharply higher before entry.
• Relative-value trade: long JPM / short QQQ for 2-6 weeks to express a mild de-risking view; JPM should be less multiple-sensitive than mega-cap growth if yields back up or positioning unwinds.
• Watch IWM vs SPY into month-end: if tax-loss harvesting and profit-taking dominate, small caps should underperform first. Short IWM vs long SPY is the cleaner seasonal expression, but only if breadth rolls over.
• Set an alert rather than a trade: if the S&P 500 fails to break more than ~2% below recent highs by mid-month, the September effect is likely being overestimated this year.