The Best Month to Buy Stocks – 40 Years of Analysis

40 Years of Analysis Reveals the Worst Months & the Best Months to Buy & Sell Stocks. This Will Help You Better Time Your Investments Decisions

A common question I get asked by students is, “Which is the best month to buy stocks?”.

It is a good question, and although each day, week, and month is different from year to year, there are common trends across the decades. I will answer these questions using 40 years of statistical stock market data.

What is the Best Month to Buy Stocks?

Using stock market data from 2000 to 2020, the best month to buy stocks is April, as the S&P500 has increased an average of 2.4% in 15 of the last 20 years. October and November are also good months to buy stocks, increasing by 1.17% and 1.08%, respectively, increasing 75% of the time. 

What is the Worst Month for Stocks?

Our data research shows that from 2000 to 2020, the worst month for stocks is September, with an average loss of -0.83%. So, if you are thinking of selling stock, it would be statically better to sell towards the end of August.

The Best Months to Buy Stock 1980 to 2009

From 1980 to 2009, the best months to buy stocks have been October, November, April, and May, registering positive returns in each of the three decades analyzed.

These are the average monthly returns in percent broken into decades, 1980 to 1989, 1990 to 1999, and 2000 to 2009.

The Best Months to Buy Stocks 1980, 1990, 2000, 2010
The Best Months to Buy Stocks 1980, 1990, 2000, 2010

You can see that for the last three decades March, April, May, October, November, and December were the only months that registered positive returns.

You can also see from the three decades during the last ten years (2000 to 2009) have been the worst in terms of total returns.

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The Seasonal Effect in the Stock Market

There is a seasonal effect, and it does repeat itself.  This could be due to a whole host of factors, retail sales, summer commodities harvest, and the build-up to the Christmas selling period.

Ultimately the state of the economy and the governments stewarding of fiscal and monetary policy play a leading role here.  We know that the ’80s and ’90s were decades of unprecedented growth, and the 2000s was a decade of payback with two severe crashes, the Dotcom bust (2000) and the Financial Crisis (2007); this is reflected in the chart above.

From 1980 to 2000 January to June were positive and October to December also, leaving only August and September not 100% positive in terms of gains.  That is 10 of the 12 months.

From 2000 to 2009, 5 of the 12 months were negative January, February, June, July, and September.

The Best Months to Buy Stock 2010 to 2014

But what are the results for the five years from 2010 to 2014?

The below chart brings the research up to date with the latest five years of data.

Here we can see that January to April has been strong, also in July and September through to December.  Only three of the 12 months being on average losers.

Stock Market Returns Monthly from 2010 to 2014 - Source S&P 500
Stock Market Returns Monthly from 2010 to 2014 – Source S&P 500 – All Rights Reserved Liberatedstocktrader.com

The Best Months to Buy Stock 2000 to 2020

MonthAverage of % Change
Jan-0.28%
Feb-0.65%
Mar0.83%
Apr2.40%
May0.30%
Jun-0.50%
Jul0.90%
Aug-0.28%
Sep-0.83%
Oct1.17%
Nov1.08%
Dec0.50%
Grand Total0.39%

 

The Best Months to Buy Stock 1980 to 2020

Over the last 40 years from 1980 to 2020, the best months to buy stock have been April +1.97%, October +1.13%, November +1.55% & December +1.22%

MonthAverage of % Change
Jan1.07%
Feb0.20%
Mar0.70%
Apr1.97%
May0.96%
Jun0.28%
Jul0.91%
Aug-0.08%
Sep-0.52%
Oct1.13%
Nov1.55%
Dec1.22%

What is the Best Month to Sell Stocks?

From 1980 to 2020, our data analysis shows that August is the best month to sell stocks. Specifically, the best time to sell would be toward the end of August as September is typically the worst month for stock market declines. September averaged a -0.52% loss over the last 40 years.

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Summary

The single best month to buy stock over the last 40 years and in every decade has been April.

Of course, what you buy is key.  If you invest in an Exchange Traded Fund that tracks the S&P 500 or any major market index, this trend “should” hold true, at least until the trend changes.

If you invest in individual stocks, then this market index analysis will bear little correlation to the stock you purchase.  The charts above show the performance of all the stocks in the index.

Remember, although a stock may increase or decrease due to the ebb and flow of the underlying market direction, the fundamentals of the stock you purchase, combined with your timing, will ultimately determine the long-term profitability of the investment.

11 COMMENTS

  1. Want to buy stock for each grandchild. How do I keep them from cashing in immediately after giving them the certificates?

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