Historically, September and October have not been kind months for the equity markets.  A study of the S&P 500 total return by month from 1926 to 2008 has proven this point.  September is the only month of the year with average returns in negative territory, coming in at -0.91%.  October is the second worst performing month of the year with a positive 0.34% average return for the month. The U.S. Equity market has enjoyed a 52 percent rebound from a 12-year low on March 9 left the S&P 500 valued at about 19 times the profits of its companies, the highest ratio since June 2004. 

The Shanghai Index was down 6.8% overnight and has the U.S. market is set to open lower this morning.  Overnight, the U.S. stock-index futures dropped, indicating the S&P 500 will trim its sixth straight monthly gain.  Futures on the S&P 500 expiring in September lost 0.7 percent to 1,020.5 at 8:38 a.m. in New York. Dow Jones Industrial Average futures slipped 0.6 percent to 9,477, while Nasdaq-100 Index futures dropped 0.9 percent to 1,628.5.

While a collapse of 2008 proportions is not likely, a manageable pullback from these levels would be healthy for the market.  This is the perfect time to review your portfolio, access your portfolio’s risk level and check to see if it is in line with your personal risk tolerance level.  After September and October of 2008, we all have a better understanding of risk and the importance of diversification.

This entry was posted on Monday, August 31st, 2009 at 1:36 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.