You might have seen many charts showing that September has historically delivered the lowest returns among all months, and some data even suggest that these poor returns have worsened in recent years. This trend could be amplified by the widespread distribution of such information through social media, creating a self-fulfilling prophecy where more investors decide to sell off stocks in September, anticipating declines.This bearish trend is not limited to U.S. stocks alone. Globally, stocks have also tended to perform poorly in September. This is not entirely surprising, considering that many international stock markets often take their cue from the U.S. markets. When something spooks U.S. investors, it typically has a ripple effect, causing anxiety among investors worldwide.

While it appears that average returns in September are typically poor, this doesn’t mean that every September yields negative returns. For long-term investors, these monthly fluctuations are often less concerning.

For example, you might consider selling your S&P 500 ETF in August to avoid poor September returns and then buy back at the end of September, effectively skipping September each year. However, this strategy might not be as beneficial as it sounds. In fact, it could result in worse performance compared to a buy-and-hold investor who holds through every month. This is exactly what Dave Haviland, Portfolio Manager and Managing Partner at Beaumont Capital Management, found. His research suggests that long-term investors are better off ignoring the media’s September scare.

Another important point is that these returns are typically calculated based on indices, which represent a basket of stocks. Since these indices are average measures, there will likely be individual stocks that perform well in September even when the overall index does not. For stock pickers, this means potentially missing out on gains if they sell off in anticipation of a poor month and their chosen stocks perform well.

Lastly, the so-called “September effect” may hold more relevance for traders focused on market timing. Even then, the impact varies depending on the trading strategy. September is known for volatility, so strategies like day trading or mean reversion that thrive on market swings might perform better, while trend-following strategies may face larger drops or whipsaws. However, switching trading strategies just for one month isn’t advisable. Few traders can excel at multiple strategies, so it’s often better to stick to a consistent style and manage risk accordingly—perhaps by reducing position sizes during periods of anticipated volatility.

Last but not least while September’s historical performance data might seem alarming, acting solely on these trends could lead to suboptimal decisions. Long-term investors would benefit more from staying the course and avoiding short-term market timing based on seasonal trends. For traders, sticking to their tried-and-tested strategies and adjusting risk management might be the more prudent approach.