To The Moon

September Has Been Tough, But 2019 Was Different. Will 2024 Repeat the Pattern? 🤔

September has historically been a tough month for the stock market, with tech stocks often taking a hit. ETFs like $QQQ, which track major tech companies, frequently see declines during this time. But there’s more to the story…

Amid the usual September gloom, 2019 stood out as a major exception. Thanks to the Federal Reserve’s aggressive rate cuts, $QQQ posted solid gains that month. It was a rare bright spot in a month that typically sees losses. But does this mean we should count on September being favorable?

The Fed’s rate cuts in 2019 lowered borrowing costs and pushed tech valuations higher. Investors flocked to tech stocks, and $QQQ benefited from this surge of optimism. However, here’s the catch: this kind of boost doesn’t happen every year. The conditions in 2019 were unique, and the subsequent years tell a different story.

In 2020 and 2021, the good times didn’t last. September brought significant losses for $QQQ—over 7% in 2020 alone! This volatility shows that 2019 might have been the exception, not the rule. September’s reputation for poor performance might be part of a broader seasonal trend. After summer rallies, markets often cool off, with tech stocks particularly vulnerable due to their high valuations. This pattern is hard to ignore.

Fast forward to 2024, and we’re facing a similar scenario with new rate cuts on the horizon. Will history repeat itself? Could this be another 2019 where tech stocks defy the September curse, or are we set for more volatility like in 2020 and 2021?

So, was 2019 just a lucky break, or does it suggest that holding tech stocks in September can pay off when the Fed steps in? It’s tempting to think the Fed can always save the day, but relying on one-off events isn’t a foolproof strategy.

If you’re considering selling tech stocks before September to avoid potential losses, remember that timing the market is tricky. Missing out on the best days can hurt your overall returns. But the past few years suggest that a cautious approach might not be a bad idea.

For long-term investors, the ups and downs of one month might not matter much. Tech has delivered strong returns over time, but if short-term volatility makes you uneasy, a different strategy might be needed.

September has been tough, but 2019 was different. With 2024 looking similar, could this be another winning year for tech, or should we brace for impact? The decision ultimately depends on your strategy and risk tolerance.