September stock market surprised experts

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I recall exactly one month ago in the last day of August and leading into September when all the financial news outlets quoted just about all the experts predicting a terrible September for stocks. Virtually all of them suggested that the stock markets in the U.S. would all end the month of September lower than it started in the beginning of the month. Let’s see how those predictions panned out.

All the experts could not have been more wrong. In September alone, the three main indices all climbed by well over 7%. That is a good climb for any month. In fact, if every month could end 7% higher than how it began than the stock market would be a stone’s throw away from doubling year-over-year. So why were all the experts so wrong? Well, it was likely a combination of mistakenly looking at the month of September historically and being too pessimistic in their outlook. The month of September has historically not been the best month for stocks. However, we are in a period of slow economic recovery which is not a normal type of situation for the economy to be in. That means that historical trends will be less accurate right now.

Additionally, experts have been too negative about the economy’s growth outlook. Some of it has to do with being used to a faster recovery and letting their impatience get the better of them. However, it does seem that the economy is starting to stabilize and a slightly faster pace of recovery may be in the works. It still likely won’t be as fast as past recoveries, but keep in mind that this recession was worse than most other recessions before it.

It turned out that although experts predicted this September would be a month to forget; it is now a month that all of them are hoping and praying that it repeats itself in October. I guess that’s why they get paid the big bucks…