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Marketplace Morning Report

Investors get SAD in September

Jill Barshay Sep 1, 2009
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Bill Radke: Sadly, that brings us to September, which historically is a downer. There’s 9/11, obviously. Lehman Brothers fell in September. The downturns leading to the crashes of 1929 and 87 both started in September. If you managed to make money in the stock market this month, you’re one of the lucky few. Jill Barshay has more.


Jill Barshay: No one really knows why stocks fall in the autumn. But Mark Kamstra — he’s a finance professor at York University — has a psychological theory. He says investors are suffering from Seasonal Affective Disorder, or SAD. The days get shorter. About a quarter of us get depressed and become risk-averse.

Mark Kamstra: They just can’t stomach it, can’t handle the risk of taking a big drop. So people like that start exiting the market for risky assets in the fall and it just keeps down the prices of risky assets.

And that includes stocks, Kamstra says.

Some investors might be tempted to make the most of September by shorting stocks. But Kamstra says there’s no guarantee the market will fall every September. In 2006 and 2007, it rose.

In New York, I’m Jill Barshay for Marketplace.

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