August is NOT awful for stocks -- but it's volatile

new york stock exchange

Investors might cringe when they see August and stocks in the same sentence.

Before we get to all the details, here's the real takeaway: August is typically a volatile month, but that doesn't mean it's a bad month. Stocks have performed well overall in August over the past 50 years. Investors shouldn't freak out, experts say.

August is solid: In recent years, August left a lot of scars. The S&P 500 posted losses -- sometimes big losses -- in three of the last five Augusts.

This month isn't off to a great start. After only two business days, the S&P 500 is slightly in the red.

However, looking back a few more years should calm your August angst. American stocks have posted gains in 10 of the last 15 Augusts.

"The perception that August is a poor month for stocks is probably rooted in recent history," says Dan Greenhaus, chief strategist at BTIG Research. "August really isn't that bad of a month and more often than not, the S&P 500 finishes higher."

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The median gain for stocks in every August since 1960 is better than the gains in May, June, July, for example. So over time and compared to other months, August isn't so bad.

August is a rocky: That's not to say it's all sunshine and sandy beaches. Some yardsticks show poor performance in August. For stock nerds, it's a matter of measures (median vs. mean) and the time frame you use.

The S&P 500's average performance is mediocre in Augusts dating back to World War II, according to Sam Stovall, U.S. equity strategist at S&P Capital IQ. Stovall also points out August has the second-highest level of volatility -- when the S&P 500 rose or fell by 1% -- of any month.

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The typical investor is left with this: taking Stovall and Greenhaus views together, August is a month that will likely be bumpy.

So what should investors do? Don't bail out and sell all your stocks, says Stovall

"By being alerted [about] the possibility of increased market turmoil, investors will be better able to weather any storm," he advises.

The two experts agree on one thing: September is terrible. Almost every measure shows stocks suffer the most in September. Perhaps it's best to enjoy the dog days of summer while they last.

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