The stockmarket in September

September is the worst month of the year for shares. After the summer lull, things can get exciting again for investors: since 1982 the FTSE All-Share index has on average fallen 1% in September, the worst average return of any month in the year.

And since 2000 the average return in September has been even worse at -1.8%. The probability of a positive return in September is 47%, making it marginally better than June.

As well as poor average returns, the volatility of returns has been higher on average than any other month since 2000. Having said that, the market has actually risen in September more times than it has fallen since 2000 - it's just that when the market does fall it tends to be a significant decline.

Dismal performance

But, however bad the month is for large caps, it is even worse for mid-cap stocks. On average the FTSE 100 index outperforms the FTSE 250 index by 0.7 percentage points - making September, along with October, the worst months for mid-cap stocks relative to large caps.

Dismal performance is not limited to the UK. The average monthly returns across 70 world equity markets are lowest in September; it is the worst month for equities in 25 countries, and only the strongest in one country - Venezuela.

In an average month for September the market tends to gently drift lower for the first three weeks before rebounding slightly in the final week - although the final trading day (FTD) of the month has historically been one of the weakest FTDs of all months in the year.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.