Eli5: why is september a notoriously red month on the stock market?
In: Economics
Nobody is really sure, but Investopedia suggests that it may just be a timing thing.
One theory is that many investors come back from their summer vacations, look at their portfolios and sell off stocks to lock in profits. This could be to build up cash for the coming months (Holidays, Birthdays, expensive Private School bills etc.) or just because it’s a good time to do that.
Given how consistent of an effect it is, the prevailing economic thought is to just ignore it. This is one of those things that happens every year so it’s already fully priced and expected.
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