The best time to buy stocks is in October, and the best time to sell stocks is in July, according to our research using 53 years of stock market data.
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 differs from year to year, there are common trends across the decades. I will answer these questions using 53 years of statistical stock market data.
What is the Best Month to Buy Stocks?
The best month to buy stocks is October, as the S&P500 has increased 1.2% in 16 of the last 23 years. Using stock market data from 1970 to 2023, October returns 1%, November 1.6%, and December 1.4%.
What is the Worst Month for Stocks?
Our data research shows that from 1970 to 2023, the worst month for stocks is September, with an average loss of -0.90%. So, if you are considering selling stock, it would be strategically better to sell towards the end of August.
Table: S&P 500 Monthly Returns 1970 to 2023
The Best Months to Buy Stocks 1970 to 2023
From 1970 to 2023, the best month to buy stocks was October because October, November, December, and January are the four strongest months, returning a cumulative average of 6%.
If you bought stocks in March and held them for 6 months, the cumulative average return is 4.1%.
The 3 Best Months to Buy Stocks
The three best months to buy stocks over the past 50 years are November (+4.1%), December (+1.4%), and April (+1.4%). February, June, and August are months that return very little profit, less than 0.2% per month.
The 3 Best Months To Buy Stocks Over 53 Years
Breaking down the last 53 years into returns per month and per decade, you can see a different picture emerge. The 2000s and the first three years of the 2020s have changed expectations. 2000 to 2010 saw terrible economic and stock market recessions. 2020 to 2023 has been extremely volatile, both on the upside of positive returns and the stock market crash of 2022.
The 3 Golden Months to Buy Stocks
Despite the 1970s crash, the 2000 Dotcom crash, the 2008 financial crisis, and the 2020 Covid crash, October, November, and December all returned a positive 1% to 1.6% return.
This chart details the average monthly returns in percent broken into decades, 1980’s, 1990’s, 2000’s and the 3 years 2020 to 2023. It is incredible that October, November, and December remain positive throughout all crashes and recessions.
The Best Months to Buy Stocks 2020 to 2023
From 2020 to 2023, the best month to buy stocks was October, and hold the stocks for 3 months to the end of December. October to December are the only 3 months that return positive results over the last 23 years.
How the Stock Market Has Changed Since the 1970s
Not all decades are created equally; the 1970s and 1980s were relatively stable despite the 1970s oil shock and the inflation of the 1980s. The advent of the internet, online trading, the popularity of stock options, high-frequency trading, and the growth of trillion-dollar corporations have made the stock market much more volatile.
S&P 500 Historical Returns 2000 to 2020
2020 to 2023 has been exceptional due to a pandemic crash in 2020, a boom in 2021, and a crash again in 2022. Any monthly statistical reference should exclude the 2020s.
The Best Months to Buy & Hold Stocks (1970 to 2020)
For the last five decades, you can see that buying stock in October and holding until July has, on average, been a good strategy.
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The Seasonal Effect on the Stock Market
There is a seasonal effect, and it does repeat itself. This could be due to various factors: retail sales, summer commodities harvest, and the build-up to the Christmas selling period.
Ultimately the state of the economy and the government stewarding 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 was positive and October to December, 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 2000 to 2023
|Month 2000-2023||Average % Return|
The Best Months to Buy Stock in 2022
In the 2022 bear market, the best months to buy S&P 500 stocks were March +3.59%, July +9.11%, October +7.99%, November +5.38%, and December +3.74%; all other months returned losses.
What is the Best Month to Sell Stocks?
From 1970 to 2023, 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 loss in all 5 decades from 1970.
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The single best month to buy stock over the last 50 years and in every decade has been October.
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, this market index analysis will bear little correlation to your purchased stock. 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.