Don’t Overreact in August

August 06, 2020

One of my favorite Wall Street quotes is from Mark Twain, who 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.”

But October may need to move over. During the past several years, the month of August has earned the reputation as being one of the more volatile months for stock prices.

In August 2019, for example, the S&P 500 Index posted moves of more than one percent in 11 of the 22 trading days.^1,2

One of the reasons for the past volatility is that some traders are away on vacation, resulting in light volume, which may have the effect of amplifying market volatility. But this year may be different with many people staying closer to home due to the pandemic.

August 2020 will stand on its own. But if history is a guide, investors should be prepared that some headlines could result in outsized moves over the next several weeks.

^{1. CNBC.com, August 31, 2019}
^{2. Past performance does not guarantee future results. Investing involves risk, and the return and principal value of investments will fluctuate as market conditions change. Investment opportunities should take into consideration your goals, time horizon, and risk tolerance. When sold, investments may be worth more or less than their original cost.}

^{The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.}