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September trading is kryptonite for the bulls. Even during strong bull market trends, September finds bull traders slamming on the brakes while they wait for new trading opportunities to unfold.

In fact, September is the only month of the calendar year that usually nets a negative return.

Yet some of the biggest market drops have occurred during September. Back in 2008, you may recall that Lehman Brothers collapsed mid-month (which triggered a cascade of selling that continued through the end of the year and into the next).

The real culprit behind September’s poor performance is calendar anecdotes and seasonal trends.

Some years ago, the anecdote “sell Rosh Hashanah, buy Yom Kippur” was prevalent, because many traders would be away at least a few days for the Jewish New Year celebration and day of atonement. Those holidays often fall in September.

Further, many hedge funds require “notice” from clients to distribute funds six weeks before the end of October (often the end of a fiscal year). That notice would be the middle of September.

These are all excuses for selling in September, but they are not the sole reason. If markets and/or your portfolio are up strong on the year (like this year), why not take some chips off the table before the start of the fourth quarter?

Plus, with volatility so low right now (currently stuck around 15-18%), the market attitude is highly complacent. That means traders and investors do not believe we are in for a market downturn. But if it happens, it will simply be another buy the dip opportunity.

I highly advise that you de-risk your portfolio, which is what I’m doing. Remember – if you have profits, take them! Sell positions to lower your risk exposure and raise cash. You don’t need to sell everything in, say Nvidia. Just sell some!

Once we get through the month, you can always jump back in if the waters are safe.

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