Is NOVEMBER The Most Dangerous Month To Invest In the Stock Market?

I ask because I have noticed that November seems to be a time for much selling off…fund managers and investors need to realized losses by the end of the year, and need to raise cash for new acquisitions. Mark twain commented on this 100 years ago…and I’ve always wondered if there is historical data to support the notion (that November is a volatile month for stock prices).
On the same note, is DECEMBER historically a good month to invest? It would seem so…as prices get beaten down in November.:confused:

No. It depends on the time frame you look at and what exactly you consider to be a “dangerous month.” This research indicates September but October has to win for volatility.

Obligatory quote:

What is the most dangerous month to invest in the market? 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. As allegedly uttered by Mark Twain

There’s no way to know what month will be the most “Dangerous.” However, with an efficient market, any information that a certain month tends to be more volatile is traded away and thus indistinguishable from any other month.

Conventional wisdom would make November a good month to invest and not a bad month. September and October are thought to be the months that disasters occur. Wall Street also talks about the “Santa Claus Rally”. In reality, I think both of these concepts have been shown to be inaccurate, but it certainly would make November a good month if crashes happened just before and rallies just after.

From my experience August, September and October are the worst. You will also find some selling near the end of the year, just after the beginning of the year, and around April 15th. But by far October is the worst month of all. I would say November is a pretty good month to invest in stocks as they usually bottom-out in October.

There’s an interesting article on this subject in the most recent edition of The Journal of Investing:

The Seasonal Price Behavior of Global Equity Markets.

The problem with trying to profit from this information is that in an efficient market, information everyone else knows isn’t worth knowing.

Has anyone tried market timing? Every “expert” is against it, but it has worked out very well for me…of course, I have the advantage that (unlike a typical mutual fund manager), I can:
-wait until a stock rallies
-hold a substantial cash reserve for quite a while
-sell without consideration (of my sale precipitating a major price drop).
So far my portfolio is up 37.43% for the year…so market timing must be working for me!

Before you get too excited about that, the NASDAQ as a whole is up well over 40% on the year, the more conservative S&P 500 index is up 20%. A single investment in QQQ (the NASDAQ 100 trust) in January would have you up 40% about now (about $25 to about $35).