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Stay tuned for August! It is the worst month for the stock market in Europe and the United States

August represents a holiday without a doubt, the beach, an umbrella, a swimsuit, relaxation… Coming to this kind of summer month is always associated with this kind of situation and object. And, in the market, it is also linked to low trading volumes, lower volatility, little movement in major stock indices, etc..

A vision that, however, does not always match reality. Although it is true that the number of businesses is lower in the summer months – August included -, The behavior of the benchmark stock indices in the US and Europe cannot be said to be particularly clear-cut. Above all, if we take into account August the last few years, which saw the outbreak of the mortgage crisis subprimethe crack caused the devaluation of the yuan, the debt crisis in the eurozone, the start of the trade war between the US and China… and which historically had currency crashes such as those of the Asian Tigers (Malaysia, the Indonesia, the Philippines, Taiwan, Hong Kong, South Korea…), the Russian ruble or the Brazilian object.

This is all generated August is now the most bearish month historically for the EuroStoxx 50. The medium has shown this for the past 30 years What does it offer? Bloomberg, which shows how the continental discretionary yield averages 1.4% over the days that month. A number is higher than Red numbers registered in May, which is always under the scrutiny of investors and analysts before the well-known aphorism the sell in may and go away.

Almost 55% of the time in the last 30 years, August is bearish

Indeed, In 16 of the last 30 years (almost 55% of the time), the summer month is really important.which makes him one of those most repeated in that respect.

“There are many advantages to investing according to the season”, says Albert Parés, manager of Annual Strategies. “Considering the annual cycle, we have a higher success rate”, expresses the same expert, who provides his clients with the best time to invest according to the historical behavior of the assets in which he takes positions. And it seems to work, because Annual Strategies Over the past ten years, it has been among the top 10% of funds in the category flexible global mixed eurotaking into account only those products with a history of more than 10 years, which is more than 180.

“The August seasonal pattern is clearly bearish for the EuroStoxx 50. Summer is usually not very good for the European stock market and August and September are usually tough months. Looking at a seasonally adjusted monthly graph of the continental selector, it can be seen that it is it is very easy to find negative results above -9% in that month”, declares Parés while emphasizing that up to six times the continental option has managed to reach that percentage of fall in the last thirty years.

“On the other hand,” the manager clarifies, “the prospect of profit to take risk is not high and you think it is better to wait considering that an increase of less than 7% has been achieved in the cases the best.”

The ‘Fear Index’ records its bullish month on average in August

This bad behavior is also felt in something called the fear indexthe Vix. The index was created to quantify the market’s expectations of volatility an increase of close to 9% is noted in August if the average of the last 30 years is taken into account. In fact, it is the most bullish month for the optional, before September and February according to the historical data record.

Last quarter bullish

Europe is not an exception in this sense, it is something that the statistics corroborate. The average balance of S&P 500 also wears Red numbers in August. In this case, the reductions recorded by the selective benchmark will be averaged i United States of America They are around 0.4% and are the biggest of the year speaking monthly for the last thirty years.

In case Ibex 35August is also ranked as one of the worst months of the year, with its average elective return 0.76%a figure only two tenths lower than the figure registered in June.

On the other hand, the months of October, November and December show the best behavior. The average of the last years shows gains for the EuroStoxx 50the S&P 500 and the Ibex 35 in these months, which is only repeated in April, before the famous aphorism sale in May.

According to data that collects Bloombergin each of the months of the last quarter of the year, the EuroStoxx 50 historically registered increases exceeding 1.65% on average over the past thirty years. And in the case of the Ibex 35 and the S&P 500 the same thing happens, although the monthly gains are slightly lower, below 1.5%.


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