Stock Market falls most in September past 100 years! (How to invest this dip!)

Here's the thing, in a couple of days it's going to be September, and you need to know that September is historically the worst month for US stocks. I'm going to explain exactly why and what you need to do to take advantage, because yesterday the stock market did begin a bit of a slide, and so this may already be starting. As always, I'm going to give you some news and some highlights as to what's been happening over the past week and what's going to affect the stock market, or what already has started to affect the stock market. And also, I need to take a quick second and apologize, because last week I totally forgot that I didn't do what I told you I was going to do. Each Saturday, my goal is to answer a question from last Saturday's video, so if you have a question that you want me to possibly answer, go ahead and throw that in the comments section right now. But last week, I didn't do it, and this subscriber lovingly helped remind me. So again, I apologize, and I'm not going to let it happen for this video. So let's start with that question from two Saturdays ago, so that I don't forget it. Let's get it out of the way right now. And this was a good question and it goes really, really well with the topic of today's video. This guy asked, should I sell all my holdings due to the possible dip? And for this answer, it's very easy for me to just say no and move on, but let me answer it fully. For the most part, no, I don't think that this is smart, but it does depend on what you're invested in. If you're in my 3Fund portfolio or something tried and true like the S&P 500 or the total US stock market, then no, it's actually been statistically a very terrible idea to try to time the market. And basically by selling out and waiting for the dip, that's timing the market. Now, if you are somebody that's worried about a big dip, it's likely that you have one of two things that's going on. First of all, you might be just invested in too risky of assets. And so if you're speculating, you don't know what might happen and that it might drop further than you'd like it to, that could be an indication. The other thing might be that you actually have money invested that you might need in the near future. So you're just overly worried about that. If either of those are the case, then yeah, it might be a good idea to reassess and it might actually be smart to sell out of those so that you can start back fresh. Generally, though, as long as you're being a long term investor and long term minded five years, 10 years, 20 years down the road, as long as you have an emergency fund funded up and you don't need the money anytime soon, then generally it's going to be OK for you to keep your money in and get through these small dips or even large dips. And even if there are large dips, just keep DCA or dollar cost averaging through it. And statistically, that has been the strongest way to invest. Selling because you think there's going to be a dip seems like a good idea because I'll just sell out right now and then buy in when it goes down. Well, yes, if that works out perfectly, then yes, that would happen. But also you have to keep in mind you're going to have a taxable event if you're selling in a taxable brokerage account. You may and probably will miss the actual bottom to buy back in because you're going to think it's going to keep going down further and really it's going to just start coming back up and then you're going to panic buy and you're going to just be overly stressed out trying to figure out this whole thing. All I know is that I work with many, many retirees. And the number one reason why they think that they don't have as much money as they probably could have had is because they kept a substantial amount of money outside of the market for a substantial period of time because they were waiting for that dip, that eventual dip was supposed to come and they lost five years, 10 years worth of compounding because they're waiting for this huge dip. So this is a good question and honestly, one that probably most of us have just in general. But honestly, for the most part, it's going to be better just to weather the storm. And if something does dip, just buy in heavily. So now in other news, what I keep seeing and something that just came up this week revolves around the crypto market. And Tom Lee just set a crazy price prediction specifically for Ethereum by the end of 2025. Then after this, I'll go over the September market dip that we may be in for. So Tom Lee predicts Ethereum rally to $5,500 soon, $12,000 by year end. I don't see it being that bullish, but I am very fascinated with and invest in Bitcoin and Ethereum. So I definitely suggest that you take some time and learn about these assets and definitely educate yourself. This is why I'm super excited to introduce the sponsor of today's video, which is 21Shares. 21Shares is one of the world's leading crypto exchange traded product providers, making it easier and more accessible for everyday investors to gain exposure to digital assets. You know, I've been invested in the crypto world for more than eight years. And so I really like what 21Shares is doing. Their mission is to bridge the gap between traditional finance and crypto by offering secure, fully collateralized and regulated investment products traded on global exchanges. 21Shares offers spot ETFs on major assets like Bitcoin and Ethereum. I love how on the 21Shares website, I can click into the fact sheet, which gives me all the info I need. With a deep focus on transparency, compliance and investor education, 21Shares is helping bring digital assets into the mainstream in a responsible, sustainable way. I always encourage you to do your own research and so you can check out the insight section to learn so much. 21Shares regularly shares timely updates on key industry shifts from ETF launches to macro market sentiment. Want to stay ahead of the curve on all things crypto and digital assets? Subscribe to the 21Shares newsletter. You'll get market insights, product updates and trend breakdowns straight to your inbox. The link is down in my description below. So go check out 21Shares today to learn more about their products and capabilities. This is not financial advice and all investing carries risks. Products may not be available in all jurisdictions. Consult a licensed financial advisor. All right, so this coming September dip. Since the 1920s, September has been the worst performing month for the S&P 500 on average. You can see here on this graphic made by Visual Capitalist that on average since 1950, September has an average of negative 0.72%, which is the largest decline of any one month. Look at the bar chart in yellow. Also check out what happens after September historically. Three to four months of very, very solid market movement. And it's not just the S&P 500. Over the last 100 years, I looked up and found out that it's actually the Dow Jones, the S&P 500 and the NASDAQ 100 where September is historically the worst month. So why? Well, I found a couple of very interesting reasons. Number one could be investor behavior after the summer. After the summer rally, institutional investors often rebalance portfolios or lock in profits heading into year end. Retail investors may also sell positions to free up cash after the vacation season or ahead of holiday spending. Number two would be tax and fiscal year timing. In the U.S. and elsewhere, the fiscal year for many mutual funds ends in September. That can prompt tax loss harvesting. The selling pressure drags prices lower temporarily. Third would be lower liquidity. Trading volumes are often lighter in late summer. So when selling picks up in September, it can have an outsized effect on prices. And lastly would just be psychology and self-fulfilling effect. Because so many traders and investors know about the September effect, they often act on it. This selling in anticipation of weakness can reinforce the very pattern. What does this mean for us investors? Well, for you and me that are investing for the long term and investing in very broad, solid ETFs like I talk about on this channel, this doesn't mean much. Basically, if there is a big dip in September or more sizable dip than we've seen, then great. We've all been kind of looking for a time to start accumulating some more of those ETFs. In general, we want to focus on fundamentals, overall economic data, monetary policy changes such as interest rate decision from the Fed, and earnings reports from companies are much stronger indicators of market direction than historical seasonal patterns. Since we're very likely to see a rate cut in September, there's actually a pretty good chance that we don't see as big of a dip in September than maybe historically we have seen because we have kind of been waiting for this rate cut. And as of the last meeting, it does look like Jerome Powell is thinking about making that cut, but we're still very uncertain. And there's been a lot of news that's come out recently in the past couple of days that kind of flips that on its head. So this leads us to some news and some things to look out for in the next couple of weeks. There's started to be some fading Fed pressure and rate cut expectations. The core PCE inflation data met expectations, reinforcing market hopes that the Fed will cut at interest rates in September. Analysts warn, however, that rate cuts now could overstimulate what appears to be a healthy economy, citing strong GDP growth, robust labor markets, and record corporate cash flow. Honestly, with this whole rate cut decision, the problem is that we're seeing some ideas as to why we should cut, and then there's some ideas as to maybe this isn't the best time to cut. It's a very tough decision, obviously very polarized views. We'll see what happens in September, but it definitely will affect the stock market. The AI rally continues, though Nvidia was rattled. Nvidia's earnings, though strong, didn't fully satisfy investor expectations. Its stock dipped nearly 1%, but the broader AI sector surged, boosting Micron, Broadcom, Amazon, Alphabet, and others as markets rallied to new S&P 500 highs. At the same time, rising geopolitical and competitive pressures in AI, especially from China's state-backed firms, have injected a dose of caution into tech-driven optimism. There's a lot going on and a lot of uncertainty these days. All I know is that if we see a monster dip in September, I'm going to be taking the plunge right then and there and getting some money into the three-fund portfolio that I always talk about and definitely not waiting for that bigger dip that's possibly coming later. You saw that chart. Statistically, for the last 75 years, September is a lull, and then the next four months are huge gains. So just keep that in mind. Here's a video about that three-fund portfolio. If you're looking for a super simple but solid way to invest, that's the answer. Or watch this video that I just made earlier this week that's going to keep you going strong and investing. Remember to keep investing simplified.