What’s the Best Month to Buy Stocks?
Market timing is often described as a futile exercise. Yet, seasoned investors know that certain seasonal patterns can influence returns. This article concludes that October is the best month to buy stocks.
One of the most persistent patterns in the stock market is the so-called “seasonality effect”—the tendency for stocks to perform better or worse during specific times of the year.
We backtested monthly stock returns to determine which months have historically offered the best average gains and highest win rates. Here’s what we found.
Monthly Stock Market Performance
Below is the monthly performance for the S&P 500 from 1993 until today:
| Month | Average Gain (%) | Win Rate (%) |
|---|---|---|
| January | 0.34 | 63.64 |
| February | 0.80 | 63.64 |
| March | 2.45 | 66.67 |
| April | 2.57 | 69.70 |
| May | 1.03 | 66.67 |
| June | 1.44 | 68.75 |
| July | 0.90 | 68.75 |
| August | -1.19 | 53.12 |
| September | 0.75 | 65.62 |
| October | 3.80 | 81.25 |
| November | 3.09 | 71.88 |
| December | 1.33 | 62.50 |
Key Findings
🥇 October: The Best Month to Buy
With an average gain of 3.8% and a win rate of 81.25%, October stands out as the best month to buy stocks in our backtest.
This is perhaps surprising, considering October is often remembered for historical crashes (1929 and 1987). But the data shows that, in recent decades, it has actually been a strong rebound month.
📈 Other Strong Months
- November follows closely with a 3.09% average gain and a 71.88% win rate.
- April and March also show robust performance with gains above 2.4% and win rates near or above 66%.
🚩 Weakest Month: August
August is the only month with a negative average return (-1.19%) and a relatively low win rate of 53.12%, making it the weakest month to be invested based on our data.
What About “Sell in May and Go Away”?
This old adage suggests that stocks tend to underperform from May through October. Interestingly, your backtest partially supports this. May to September shows lower average returns compared to the October–April period.
Conclusion
If you’re looking to optimize your entries based on seasonality, October and November offer the most favorable historical returns and reliability.
That said, remember that seasonal patterns are not guarantees, and should be used as complements to a broader investment strategy.