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It's that time of year again. Children are heading back to school, the summer heat is giving way to (slightly) cooler breezes, and investors start to get terrified at the prospects of a crash.

I won't deny that there aren't reasons to worry about the aging bull market. But thinking that stocks are doomed just because you turned the page on your calendar won't get you anywhere. Even if you believe the statistics, it's still almost as likely that you'll miss out on what could be another move upward for the stock market.

Lies and statistics
Pretty much every year at this time, journalists like to pull out their statistics caps and point out that when you look at historical data on the Dow Jones Industrial Average (INDEX: ^DJI  ) , the worst performance comes during September. CNBC, for example, points to the Dow's record since 1896, pointing out that the index has lost more than 1% on average and has fallen 58% of the time.

For truly catastrophic declines, October's numerous crashes, including the most famous 1929 and 1987 ones, overshadow September. But when you put it all together, the season makes everyone nervous, regardless of whether things have been going well or badly for the market during the summer months.

A tale of two years
The past two years make great examples of the two ends of the spectrum. Last year, September turned out to be horrible for the stock market, with the Dow dropping more than 6%. The problems that faced the market back then look eerily similar to what we're dealing with now: Europe's sovereign-debt crisis had started to come to the center of the global macroeconomic discussion, and although the full extent of the problem hadn't yet become clear, its potential impact on the slow U.S. recovery was of great concern to investors. Both Alcoa (NYSE: AA  ) and Bank of America (NYSE: BAC  ) lost more than 25% of their value in that single month, as their particular sensitivity to Europe's economic woes spooked shareholders.

Yet in 2010, the market made just about the opposite move. Nervousness earlier in the summer gave way to an enthusiastic September rally, with the Dow rising more than 7%. Caterpillar (NYSE: CAT  ) and Alcoa were the big gainers during the month, but all 30 Dow components managed at least modest gains.

Where do we stand now?
Admittedly, the market's movements during the first part of 2012 more closely resemble last year than the year before. But to conclude just from that fact that September will be troublesome for the Dow is far too simplistic.

If anything, the market seems to be at a major crossroads. The European situation is rapidly approaching a crux, where policymakers and market participants will have to work together to figure out the best solution for the eurozone's survival. If Europe's nations can unite and agree to a framework for acknowledging the economic differences between the different regions of the continent, then markets there would probably rebound sharply and lift U.S. stocks along with them. If not, though, the crisis could continue, holding back the rest of the world's growth as well.

But the U.S. economy is further along than it was this time last year. Housing appears to have truly bottomed, and although the recovery has been tentative, we're at least seeing signs of gains in both home sales and prices. Home Depot's (NYSE: HD  ) stratospheric rise comes in part from that recovery, but a housing recovery could help bolster economic activity around the country -- a sign of confidence that could spread to other parts of the economy as well.

Don't give up
After only mild trading volume throughout much of the summer, September should at least mark the return of professional interest in the market from Wall Street. Be on the lookout for news, both good and bad, but don't convince yourself that the market is doomed to have a lousy September. Just be ready for whatever comes, understanding that prices could rise or fall.

Economically sensitive stocks are particularly susceptible to volatile markets in either direction. Caterpillar could rise or fall sharply depending on what happens with the broader economy. Be ready for whatever comes by reading the Fool's premium report on Caterpillar. You can't afford to miss out, so be sure to get your copy today.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter, @DanCaplinger. The Motley Fool owns shares of Bank of America. Motley Fool newsletter services have recommended buying shares of Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 04, 2012, at 3:53 PM, jargonific wrote:

    Home Depot is rising because investment cartels are buying up homes at depressed prices, thereby denying American homeowners of their right to obtain work outs with banks. In addition, with low interest rates, financial cartels are forming to back the real estate speculators and that is the real cause of the present "recovery" in home prices on the Eastern seaboard anyway. Who would buy a home in Louisiana today? Specifically, who would buy a home in the midst of a gigantic fire storm that has burned homes throughout the Midwestern states? Where markets are being revived, it's speculators moving in to snap them up for bargain prices. That isn't a recovery. It's a rip off. HD shares will move one way or another depending on what these investment groups do in repairing these homes and then renting them... often back to the people who lost them. What an injustice. --But the point is too that it does not speak of recovery, or of new real estate bubbles. If the housing market does "recover" it won't be due to these global robber barons but to the presence of jobs... anybody see those on the horizon for real?

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10/28/2016 2:21 PM
^DJI $18161.84 Down -7.84 -0.04%
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HD $123.63 Up +1.37 +1.12%
Home Depot CAPS Rating: ****