It's also possible that the September Effect is related to corporate profit-taking to bolster their balance sheets or even parents selling stocks to pay for back-to-school shopping and college tuition. Perhaps most likely, the September Effect could just be random chance that evens itself out over the next 100 years.
Should you invest differently in September?
The September Effect is an interesting piece of investing trivia, but it's not something that should change how you invest in stocks. You can't rely on it to predict what will happen in September. After all, even if that month has been the worst on average, stock prices have only declined about 55% of the time -- barely more than the odds of a coin flip.
Monthly returns also shouldn't be a major concern for long-term investors. When you're investing in companies and funds that you plan to hold for five to 10 years or longer, then a potential dip in September isn't going to make or break your portfolio. Short-term price movements are important for traders, but that's not an approach The Motley Fool recommends.
Look at it like this: You probably wouldn't pass on investing in a stock you love just because it's September. A great company is a great company, no matter when you buy it. Invest the same way in September that you do throughout the rest of the year.
