Sep 04, 2014

    Sept the worst month for stocks? Maybe not

    I REFER to the article "Traders to tread lightly in Sept" (My Paper, Sept 1).

    American humorist Mark Twain famously remarked, "It is difference of opinion that makes horse races," to which a wag added "so too missionaries and the stock market".

    One could argue that the comment, "September is viewed by some traders as the worst month on the calendar for the stock market," in the article falls appropriately into a similar debatable category.

    Twain had a slightly different opinion, based on his own disastrous forays into the stock market, which took him to the brink of bankruptcy

    He said: "October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February."

    The "naysayers" are sceptical of the S&P 500 index's 32nd record close for this year above the 2,000 level on Friday. They probably subscribe to the dictum laid down some decades ago, "When prices have risen steeply, they are less likely to do so further," and the converse when down.

    As for the Parthian comment on turnover, it is difficult to escape the conclusion that market activity in recent times has largely been fuelled by the abysmally low interest rates that have been long prevailing.

    The concentration of public interest and activity on cheap "penny stocks" is clear evidence that "investment" is out, and "trading" rules the roost.

    In such a scenario, another pithy gem from Twain is too good to be dismissed.

    "There are two times in a man's life when he should not speculate: When he can't afford it and when he can," he said.