Here are two notes (one without a conclusion). .

Another confirmation of Chinese not-so-miracle growth

Electricity was not the only economic statistic not controlled / calculated by the Chinese government that showed that the 6% plus GDP growth in the first six months of 2009 (at a time when the global economy was sliding off the cliff) was an accounting miracle.  

Guangshen Railway announced its results a few days ago for the first six months of 2009: “tonnage of freight transported by the Company amounted to 26.5406 million tonnes (2008 interim: 34.5508 million tonnes).” – a decline of 23%.

September – the worst month for stocks

October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February.

-       Mark Twain

Sept. 1st is a very strange day for me. In Russia the school year across the whole country started on September 1st.  I vividly remember myself as a child on that day throughout my childhood.

The sun always shined brighter that day; the cleanliness of my uniform was at the year’s peak. It was a custom to bring flowers to teachers on that day, so the school smelled like a botanic garden. Every year I promised myself that I’d be more serious, smile less and make fewer jokes.  Teachers did not like my smile or my jokes, always called me a class clown.

Every year I failed at these goals, thank God! 

This introduction has absolutely nothing to do with what I am about to discuss except that today is Sept. 1., and September has historically been the worst month of the year for investors.

I’ve looked at the data from 1900 to 2008 Stocks average and median returns were -1.16% and -0.56%, respectively. That’s far worse than any other months.   In fact, with the exception of June where median returns were down 3 basis points, no other month of the year had negative median returns.  In 63 out of 108 years. September brought negative returns to investors, greater than any other month.

It gets worse. When returns in August were greater than 2%, average and median returns in September were -2.29% and -1.44%, respectively.

I’ll be honest; I have no idea why this happens or what this September has in store for us. Maybe investors don’t like the end of summer and the first months of fall. Maybe if some of your stocks a hovering close to fair value, you sell now. Or maybe if you were looking to buy a stock, you wait a little.

Kindest Regards,

Vitaliy Katsenelson, CFA

Director of Research / portfolio manager

Investment Management Associates, Inc.

7979 E. Tufts Ave, 820 Denver, Colorado 80237

Office Phone: 303.796.8333  Cell: 303.564.6142

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