24 years of data says this is the best month to buy ASX stocks

Is it time to send cash to the brokerage account?

A smiling farmer does the thumbs up amid a field of blooming sunflowers.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's common for the ASX stock market to experience ups and downs. Every day, different buyers and sellers trade amid various economic and political events.

However, over time, some months have built up a reputation for positive returns — think the 'Santa rally' in December. S & P Market Intelligence data shows that December has historically been one of the best-performing months for the S&P/ASX 200 Index (ASX: XJO) since 2000, with an average monthly return of 1.49%.

The positive long-term returns of the market include both the good months and the bad months, so it's probably best to stick with a long-term investment mindset – I wouldn't sell anything based on what month it is.

However, if share prices do fall, then it could be an opportunity to invest at a cheaper price.

There's one month that sticks out in the data as the best time to buy.

September woes

According to S & P Market Intelligence, September has been the worst month (by far) over the last 24 years, with an average monthly return of negative 1.35%.

The other two negative months have been May and June, with average negative returns of 0.62% and 0.44% for the ASX 200 stock market, respectively. The chart below shows the average movements for each month over the past 24 years.

Source: S & P Market Intelligence

Coincidence or not, the ASX 200 is currently down by 1.4% in September 2024 to date, which is almost exactly what the average decline of the last 24 years has been.

I wouldn't expect the decline to be 1.4% by the end of the month, though.

However, I do think we can take advantage of these slightly lower prices by buying at a cheaper price.

Households that regularly invest can utilise a dollar cost-averaging strategy. Warren Buffett once explained why it's a good thing for accumulators that share prices fall:

If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?

Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.

Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

Where I'd invest in ASX stocks

There are plenty of attractive ASX ETFs that are priced lower and could be good investments.

Investors wanting exposure to the cheaper ASX 200 may want to consider the iShares Core S&P/ASX 200 ETF (ASX: IOZ) or one of the similar ASX-focused ETFs.

Some of my favourite ETFs — including the Vanguard MSCI Index International Shares ETF (ASX: VGS), Betashares Global Quality Leaders ETF (ASX: QLTY), and VanEck MSCI International Quality ETF (ASX: QUAL) — are also lower after the volatility.

Individual ASX 200 shares could also be good investments. The Motley Fool website is all about finding good ASX stocks to invest in.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
ESG

Why I don't invest in 'ethical' ASX shares

Here's why we need to be careful when investing 'ethically'.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

Bell Potter names more of the best ASX shares to buy in September

These stocks are top picks in September according to the broker.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Share Market News

5 things to watch on the ASX 200 on Friday

Another positive session is expected for Aussie investors today.

Read more »

Two people tired and resting after sports race.
Share Market News

Here are the top 10 ASX 200 shares today

ASX shares bounced back this Thursday after yesterday's savage selling...

Read more »

Female worker sitting desk with head in hand and looking fed up
52-Week Lows

Mineral Resources shares hit an almost 4-year low. What's going on?

It's been a bad few days to own this stock...

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Bank Shares

2 reasons to buy Westpac shares this month (and 1 reason to wait)

Here's my take on Westpac's pros and cons right now.

Read more »

a man in a business suit holds his hand up to his mouth as though sharing a secret and gives a sly grin.
Share Market News

3 fallen ASX All Ord shares insiders are buying this month

Significant declines have led to insiders seeing an opportunity to grow their holding.

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Share Gainers

If you invested $6,000 in this ASX All Ords gold stock 2 years ago, you'd now have $57,000!

Shares in this top ASX All Ords gold miner have soared 850% in two years. But how?

Read more »