Daily Spotlight: August a Challenge for Investors

Summary

The dog days of summer may be perfect for a vacation at the beach (or in the mountains, as is the case with the Federal Reserve Board), but investors don’t always get to enjoy the month of August. Indeed, our analysis of monthly returns going back to 1980 indicates that the eighth month of the year is ahead of only two other months — February and September — in terms of average return. Now there have been some hits. The month has a “win percentage” of 55%, although last year the S&P 500 fell 2.1%. And there have been some real clunkers, including 1981 (-6%), 1990 (-9.4%), 1998 (-14.6%), 2001 (-6.4%), and 2015 (-6.3%). August generally is a quiet month on Wall Street. The second-quarter earnings reports are (for the most) part finished in July. The IPO market, already quiet this year, often goes into a period of hibernation. Volume tends to be light — which is perfect for higher volatility. This August, nerves are likely to remain