The stock market is about to implode! What should you do if September is the worst month for investors?
INVESTORS are being cautioned to prepare for a possible stock market meltdown, since September has historically been the worst month for stock markets.
Over the previous 40 years, September is the only month of the year in which global share values have decreased on average. How should you respond if top financial managers are preparing for a possible stock market crash?
Autumn is notoriously difficult for investors. In September or October, the Wall Street Crash of 1929, Black Monday 1987, the 9/11 attacks in 2001, and the fall of Lehman Brothers in 2008 all occurred.
Jason Hollands, managing director of fund platform Bestinvest, believes we should be concerned based on history. “September is a risky month for investors because it is known for its unpredictable markets. This isn’t just a legend.”
In the last 40 Septembers, global share prices have fallen in 21 of them, making it the only month in which stock markets have lost more than half the time.
In addition, September is the only month of the year in which stock values have declined on average, with several big collapses.
According to the MSCI World Index, stock markets have had a solid start to the year, surging 16.2 percent.
Covid vaccine optimism, as well as major monetary and fiscal stimulus programs, have fueled the surge, but Hollands warned that it may not persist.
“Global equity markets have been losing steam. According to anecdotal information, some fund managers have been buying derivatives to hedge against market declines.”
As the costs of products and services begin to rise over the world, inflation is a huge danger. To prevent the economy from overheating, central bankers may be forced to raise interest rates and reduce stimulus programs.
Higher borrowing costs will stifle growth and raise the cost of servicing government debt, which has risen dramatically as a result of the outbreak.
Other grounds for a stock market meltdown, according to Hollands: “Historically high values for technological businesses, high levels of corporate debt in the United States, and concerns about a surge in the Covid Delta variant raise concerns.”
Geopolitical dangers are also increasing. “These include concerns over whether Afghanistan would once again become a safe haven for terrorists, as well as escalating US-China tensions.”
It is critical to maintain your composure.
Anyone trading in stocks and shares, according to Hollands, must understand that markets never move. “Brinkwire News in Condensed Form.”