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Stock markets – Is it again a horror September on the stock exchanges? | News

Wednesday, August 30th, 2017 | Economy

The statistics are clear: September is a bad month for equity investments. No other stock market month has such a negative average performance. This applies to the American Dow Jones, to the German Dax and also to the Swiss exchange. As the following chart shows, an investment in the Swiss Performance Index (SPI) since 1988 has yielded an average of -1.1 percent. The month of August is also negative.

Sources: Bloomberg, Raiffeisen Investment Office
As a matter of fact, in the past, events that had a major impact on the stock exchanges occurred in the past. In 2001, the attack on the Twin Towers in New York, the insolvency of Lehman Brothers in 2008, the Chinese exchanges caused uncertainty among investors worldwide ,
The graph also shows that the fluctuations between the years are great – that there were also many very good years (the gray points). Sayings such as "Sell in May and go away, but remember to come back in September" do not make much sense. Investment experts also pay little attention to such seasonal behavior patterns.
"Statistically, there are specimens that point to September as a particularly bad month for stock exchanges, but they are not strong enough for us to change the tactics," says Roland Zins, Head of the Investment Office at Raiffeisen. For Christian Gattiker, chief strategist of the Bank Julius Baer, ​​such wisdom is simply part of the "Börsen folklore".
Nevertheless, there are some recurring features that characterize the start of the autumn on the stock market. The fact is, for example, that after the summer holidays at the end of August many investors return to the markets, which leads to more liquidity and tendentially greater fluctuations. "In addition, September is the last month of the weakest third quarter of the year from a macroeconomic point of view. And there is a certain vacuum in terms of company numbers," says Bär strategist Gattiker.
Is the hot autumn coming?
In such an environment, (geo) political events tend to move closer to investor focus, as in the past few weeks. Uncertainty factors such as saber rattling between the USA and North Korea are currently limiting the price favors. The Swiss Market Index (SMI) has been moving for around four months in a narrow price range between 8800 and 9200 points.
Is there a hot autumn on the Swiss stock exchange? If the geopolitical turmoil makes a difference, the analysts are quite confident. In the next six months, Julius Baer expects a return in the mid-single-digit range, which includes dividends. "The global economy is buzzing and for the first time in seven years, Europe's companies are again showing a positive profit growth," says Christian Gattiker. The medium-term upward trend also remains intact for Zürcher Kantonalbank.
Somewhat more skeptical is Thomas Heller, head of the Schwyzer Kantonalbank. Since the beginning of 2016 the markets had not experienced any correction in the double-digit range, and in his opinion the imagination is gradually missing for even higher prices. "But it does not take much for a setback, so I prefer to miss something and then fall less deeply than vice versa," he says.
In a major correction, many stock market wisdom would be turned upside down again – clarifying what Mark Twain wrote in 1894: "October is one of the most dangerous months for stock market speculation, the others being July, January, September, April, November and May , March, June, December, August and February. "


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