We're now comfortably in September, but ASX investors might be getting a bit nervous about a certain prospect. Could it mean that a stock market correction is imminent?
The stock market, like many old and venerable institutions, is plagued by various myths and legends. One of the most famous is the adage 'sell in May and go away'. Another is that September is the worst month of the year for the share market.
Last year certainly lived up to that reputation. As my Fool colleague Bruce noted last year, September saw the S&P/ASX 200 Index (ASX: XJO) lose more than 7% in what was a horror month for the local markets.
So does this mean it's time for ASX investors to cash out right now before we all lose even more money this month?
Well, let's look at the data. Here's a table that shows how the ASX 200 started and finished every September since 2018, and how much the index gained or lost over the month:
| Year | ASX 200 at end of August | ASX 200 at end of September | Change (%) |
| 2018 | 6,319.5 | 6,207.6 | (1.77%) |
| 2019 | 6,604.2 | 6,688.3 | (1.27%) |
| 2020 | 6,060.5 | 5,815.9 | (4.04%) |
| 2021 | 7,534.9 | 7,332.2 | (2.69%) |
| 2022 | 6,986.8 | 6,474.2 | (7.34%) |
As you can see, it turns out that September's grim reputation is indeed well-founded. In fact, four out of the past five years have produced a negative return over the month of September for the ASX 200 index. Two of those years even gave investors a horrid loss of over 4%.
So it seems that, unlike the 'sell in May and go away' adage, this one actually has some compelling evidence to back it up. Already, the ASX 200 has lost 2.2% this month. If that trend continues, we could well see the ASX 200 enter into a stock market correction by the start of October.
Am I selling before the stock market correction?
However, despite this evidence, I'm not selling out of my shares this month.
I think that humans have an uncanny ability to find a pattern in anything and assume it's some kind of sign from the divine.
What the indisputable evidence shows is that investing in ASX shares is one of the best paths to wealth available to us. And it also tells us that attempts to try and time the market usually always fail. Perhaps the past five years were just a coincidence, and the next five September will prove to be the best months of the year. I'm not sure.
But I think everyone's portfolio would be better off if we stopped worrying about Mays and Setpembers and focused more on owning the best businesses that we can find at the cheapest share prices we can buy them at.
Perhaps a better use of our time this September is keeping an eye out for bargains that the market might throw our way. As it apparently is wont to do at this time of year.
