The Wall Street Journal had an interesting article the other day titled, For Stocks, September May Be the Cruelest Month, It provides a quasi historical timeline highlighting some very bad Septembers- more specifically, the dates between Labor Day and Halloween are especially scary (couldn’t resist).

The article points out the following examples:

September of last year
September-October 2002
September, 2000,
The 1998 financial crisis
The crash of 1987
The crash of 1929
September of 1931, the worst month of the depression
The great panic of 1907
The great crash of 1873? September.

After outlining all these events and not really drawing any statistical significance the their monthly timeliness, the article ends with this conclusion.

“So what, if anything, should you do? In practical terms, maybe not that much. For most people, even a performance difference of one or two percentage points isn’t going to cover the transaction costs of selling before the end of August and re-entering the market a month later. And stock market patterns aren’t ironclad. The market may even jump in September, as it did in 2006 and 2007.”

We find ourselves very frequently responding to the claim that a stock picker’s skill is essential in times of high market volatility. And with the Dow coming off its best weekly performance since March 2000, there has been ample opportunity to examine this assertion.

According to Barron’s during the most recent run up:

The 50 most shorted stocks have rallied 17.6%, outperforming the 50 least shorted stocks by 8.80 percentage points (over the same time frame).

The 50 stocks with the lowest analyst ratings have outperformed the 50 with the highest ratings by 3.80 percentage points.

One sample size does not lend itself to proof of anything but this pattern of underperformance (or simply put “Getting It Wrong”) is very consistent with past events.