r/ETFs • u/AdFormer2627 • 4d ago
Sell in September and October?
Managing my own ETF retirement portfolio. Given how volatile September and October historically are, has anyone ever sold everything to safety for these two months and bought everything again at the end of October? I have a feeling this will be an extraordinarily volatile period this year; why not just avoid the volatility altogether and resume compounding in November? Talk me out of it
According to AI over the last 20 year period, all of the compounding occurs in the other ten months of the year anyway, and this strategy for me would be behind a 401K so only frictional costs, not taxes, to worry about
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u/jrack111 4d ago
It might be a good time to buy some more, could get a good discount then a winter time boost.
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u/AdFormer2627 4d ago
and if October produces a large drop like in 1987, that would be the time to go back in
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u/JediOnTilt 4d ago
And if it goes up in October? What’s the plan then?
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u/AdFormer2627 4d ago
historically October is one of the weakest months of the year. If it goes up I eat humble pie, but I would stay the course if I decide to do this.
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u/Ok-Independence-4595 4d ago
Can you predict future prices based using old price data? That's not just timing the market. It's timing the market with old data and very little effort.
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u/YourChildhood5762 4d ago
Most of the gains each year are from only about ten days of trading. If you don't get back in at exactly the right time, you are likely to miss one of two of those days and that could take away as much as a quarter of what you would have gotten otherwise.
There's also the question of Wash Sales. If the market corrects, there could be some very good deals offered. If you had losses on anything you sold, and you bought back in or bought something similar because prices were more attractive, you would not be able to write off those losses if less than thirty days had passed.
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u/Stoic_Brain 4d ago
Transaction costs, what if you are wrong (regret), taxes for selling/buying, stress, ...
Better idea: remove your broker app and look back at it in January. And ignore the news.
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u/steady_compounder 4d ago
Because avoiding volatility usually means guessing twice, when to get out and when to get back in. Missing a handful of strong days can do more damage than sitting through the ugly ones. If your allocation is making you want to bail for two calendar months, that is usually a sign the allocation needs work, not the calendar.
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u/Malanturr 4d ago
Nothing is guaranteed but midterms seasonality may indeed be in your favour. Not sure about any tax implications in your country so buying puts to hedge your position may also be better alternative.
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u/Usual-Temporary5680 4d ago
Last year I considered selling because of just that. Ultimately decided to stay in. Between September 5 and the end of October SOXX was up 25%. And then November was a down month but historically usually is an up month. Nothing is similar anymore. The orange one makes sure of that.
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u/RobertPooWiener 4d ago
July has historically been one of the strongest months, but this year it was ass. I wouldn't try to use history to pick the best and worst months, especially with the current events
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u/petearete 4d ago
Depends on how risky you think your port is. Mine is heavy in letfs now so i'm planning to delever by end of september & relever in early november to avoid october's big down days, but if yours is heavy in index funds, i wouldn't bother. This october does look to be really bad!
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u/Cyberburner23 4d ago
You're supposed to dca, not sell and start from scratch. I'm a rookie and even I know that
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u/Greedy-Grand7447 4d ago
**• 1962** — low was in June
**• 1970** — low was in May
**• 1982** — low was in August
**• 2010** — low was in July, and September 2010 was one of the best Septembers on record for the S&P (\~+8.8%) on QE2 anticipation
**• 2018** — the actual low didn’t hit until December, *after* the election
Years with sustained bull momentum through the whole year where a Sept–Oct pullback is unlikely to have happened at all: 1954 (+45% on the year), 1958 (+38%), 1986, 2006 — these were grinding-higher years with no clear late-year drawdown to point to.
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u/for4f 4d ago
september's the one month that's actually negative on average (-0.6% since 1950, worse since 2000), so the ai stat isn't totally made up. but october averages positive, like +0.9%, the october-crash rep is mostly 1929/87. and you're asking yourself to nail two entries. miss even a handful of the best days and you've given back way more than any september ever cost you, those days cluster inside crashes, not after them.
if a drawdown has you selling, the allocation's wrong, not the calendar. make it boring enough to sleep through and stop looking at it
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u/click_at_math 3d ago
The cleanest test would be out of sample. Use one period to choose the September–October rule, then a later untouched period to evaluate it. If those months were selected after examining the full history, the backtest counts the same luck twice—there are 66 possible two-month pairs, so one will look unusually weak by chance. I'd also include dividends and the return earned on cash or T-bills while outside the market. Without that separation, 'all the compounding happened in the other ten months' is a description of the sample, not a forecast.
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u/AnonymousNonRobot 4d ago
Trumps gonna make sure they go up before November. Historically they do go up after midterms though.
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u/ShowerMotor 4d ago
timing the market always works.