What’s the worst month for stock market returns?

If you said October, you would be wrong, but no one would blame you. Many people associate October with stock market misery because of three infamous crashes that occurred during the month—the Great Crash of 1929, the Black Monday crash of 1987 and the financial crisis crash of 2008.

In fact, it’s September that takes the prize for the historically worst performance of any month in both Canada and the U.S., according to PWL Research Director Raymond Kerzérho.

In Canada, the S&P/TSX Composite index produced an average return of minus 1% in September since 1956 compared to minus .14 for October. The S&P 500 index in the U.S. returned minus .68 % on average in September since 1926. Despite the crashes, October hasn’t even been the second worst month of the year in the U.S. That honour falls to February with an average return of plus .41%. October comes in forth with plus .64%.

What’s the best of times?

Many people choose to sell their investments in the fall in hopes of avoiding a market correction. Research shows that’s a mistake that can be very costly. For one thing, the markets have historically performed better in the final three months of the year than during the other three quarters. Since 1956, the TSX has returned 3.7% on average in the fourth quarter while the S&P 500 has returned 5% in the same period since 1950.

In general, investors who try to time the market—jumping in and out to avoid corrections or take advantage of upswings—end up reaping lower returns. For example, a long-running study of U.S. investor returns shows they consistently underperform the indexes, thanks to their misguided efforts to outsmart the market.

The study by Dalbar Inc. found the average U.S. equity fund investor earned 4.9% a year over 10 years to the end of 2017 compared to 8.5% for the S&P 500. Fixed income investors earned .5% versus 3.3% for the index. Investors also underperformed by substantial margins for other time periods.

The reality is you don’t know what’s going to happen in the future. The best strategy is to buy a highly diversified portfolio of low-cost investments and stick with it for the long term. Be patient and tune out all the market predictions and other noise.

The temperature outside is getting colder, the days shorter and there could be a correction this fall. But that possibility is no reason to abandon your plan. Stick with it; you’ll profit in the long run.