September Mourn

Charles Payne
September morn
Do you remember
How we danced that night away
Two lovers playing scenes
From some romantic play
September morning
Still can make me feel that way

Neil Diamond

Unfortunately for the stock market, September hasn’t been a very romantic month as most of the dancing has been the exit shuffle, investors bolting for the doors as fast as leaves falling off the autumn trees. I guess it all began on September 3, 1929 when the Dow peaked at 381.2 only to freefall before hitting terra firma (temporarily) on October 24 of that year, a decline of 21% in just seven weeks. Since then September has shared the reputation as one of the worse months for the stock market, along with October, which has earned its ferocious reputation with the three worst single day crashes in stock market history, 1929, 1987 and 1989. According to the Stock Traders Almanac September has been the worst month for the market over the last half century, the absolute worst for the Dow and S&P 500 and the second worst for the NASDAQ composite.

*Tune in this weekend to our Business Block, Saturday beginning at 10am ET, for more with Charles Payne and the entire FNC business team.*

With that in mind investors are surely bracing for the worst-case scenario this September. In addition to the self-fulfilling aspect of this scenario (I can’t think of any chronological Wall Street axiom that has more credence, the January Effect sometimes begins in November, and “selling in May and going away” has been a big mistake for some time) there are some real, serious challenges ahead for the market.

• Higher Interest Rates
• Higher Energy Prices
• Stronger Dollar
• No Elections

So, the big question: what’s an investor to do? There is never a simple solution or a one-size-fits-all answer to that question, but if someone is really an investor and understands that stocks move up and stocks move down I think an investor would want to ride out the turbulence. If crude oil continues to rise, and I think it will, then we may actually see an unintended consequence of the Fed slowing its interest rate hikes or stopping them altogether. That would more than mitigate higher crude. Moreover, the initial impact of higher crude would trigger a chain reaction that would ultimately see less demand and hence, lower prices. Such a scenario may not begin to play out until the average gallon of gas across the nation is at $3.00. The wildcard here is if the Fed continues to raise rates without telegraphing an end — then we’d be in real long-term trouble.

I don’t think that is going to happen, however. Instead, I think the market is going to take its lumps and price in higher gas, higher interest rate, and lower corporate profits just in time for the market to reach a trough in September or October and begin to rally back, as even the slightest positive news will be warmly received. This script isn’t new or unusual; it has played out in each of the last five years, as September or October saw bottoms for stocks that gave way to rallies into the end of the year.

2000 October 9,564 10,971
2001 September 8,062 8,847
2002 October 7,197 8,397
2003 September 9,230 9,275
2004 October 9,708 10,027

I think investors should go into the autumn holding stocks of good companies and being prepared to buy stocks of good companies. In the new millennium this strategy has had investors dancing the December nights away with delight and riches.

Tune in this weekend to our Business Block, Saturday beginning at 10am ET, for more with Charles Payne and the entire FNC business team.

Charles Payne is the founder and CEO of and appears regularly on FNC's Cost of Freedom Business Block.

Charles Payne is the host of Making Money with Charles Payne (weekdays 6-7 PM/ET).