Here’s the inside baseball on why August is the only month other than September with negative market returns…
…everyone is on vacation.
No, seriously. The big portfolio managers go on vacay and the junior managers take over.
What results is low volume trading. (That means there are literally fewer trades happening across the entire market.)
Basically the big PM’s are like, “Okay, Junior all you have to do is keep the shipping pointed forward. Don’t turn, brake or accelerate. In fact, don’t make any decisions at all. I’ll be back in two weeks.”
What happens in a low volume trading environment is anything that DOES happen gets amplified.
If there are fewer trades overall, then it takes fewer trades to sway the market.
So the market’s down 6% in August and it might have further to go.
But as always – one woman’s vacation is an investor’s opportunity.
