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
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Don’t Overreact in August
August 12, 2020