Best Month to Sell Stocks

September is traditionally thought to be a down month. October, too, has seen record drops of 19.7% and 21.5% in 1907, 1929, and 1987.These mark the onset of the Panic of 1907, the Great Depression, and Black Monday. As a result, some traders believe that September and October are the best months to sell stocks.

The September effect highlights historically weak returns during the ninth month of the year, which could be aided by institutional investors wrapping up their third-quarter positions. In fact, looking at the chart above of monthly average returns, September averages the worst among the calendar year.

The October effect is also salient for some investors. Even though October, on average, has been a positive month historically, many of the worst market crashes have occurred in this month. So while September may, on average, be a weaker month than October, you may want to sell in this month to avoid the above-average volatility that October can experience.