Labor Day is officially in the rearview mirror. Fall is rapidly approaching up next for the big holidays are Halloween, Thanksgiving, and Christmas. Is it too early to be thinking about Christmas?
Thinking about Christmas right now is a bit crazy today its supposed to be 106 degrees in Phoenix.
What isnt crazy is thinking about September and your trading plans.
Its been a very important month for the markets. It used to be with the end of vacations and back to school spending and end of year business spending September would be a great barometer for economic activity.
Now, however, when portfolio managers return from their long Labor Day weekend on Marthas Vineyard, they use September as an opportunity to clean house.
The third quarter reporting period is less than 18 trading days away and managers everywhere are going to spit shine their portfolios.
As a result, September can be a dangerous month.
Many will question my sanity and point towards October and youre right, partially. October is a scary month in the markets because of the big market swoons.
September, however, is the most dangerous.
Heres proof since 1950, September has posted 24 winning months for the Dow Jones Industrial Average. Not bad till you do the math and realize September has also had a whopping 37 down months.
Thats more months posting a negative return than any other!
Like I said, September is a dangerous month.
So whats that mean for penny stock investors?
To me it means downward pressure on the markets. As a result, the first stocks to be purged from most trading accounts are penny stocks. Many investors wrongly assume they are the most risky, so they are the first to go (right or wrong).
So while many penny stocks are taking it on the chin in September, I smell opportunity.
Remember, just because a stock sees a bad few weeks of performance doesnt mean the underlying company is always in trouble. As a matter of fact, when you see the market swoon and dive, its a perfect opportunity to be looking at the markets and buying your favorite stock.
Use any market dip as an opportunity to add new penny stocks to your portfolio. Or even stock up on your old favorites.
While September might be a dangerous month, its also filled with opportunity for penny stock traders who dig a little deeper.
Until next time,
Category: Investing in Penny Stocks