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History says July is cool time to own stocks

Adam Shell

Ah, summer. Thoughts of sandy beaches, sunny days and, um, summer stock market swoons.

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But July is an exception. It's known more for cool, refreshing "ice stock pops," rather than stock market meltdowns, according to seasonal performance data from Bespoke Investment Group.

Mauro Grigolio | E+ | Getty Images

In the past 20 years, the Dow Jones industrial average has posted average gains of 1.1% in July, and been up 65% of the time.

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But the Dow has made stock investors sweat out the other summer months.

"June, August and September have all averaged declines over the last 20 years, but July is the one summer month where green shows up," Bespoke co-founder Paul Hickey noted in his July seasonality analysis.

June has averaged losses of 0.8% over the past 20 years, August has dipped 0.7%, and September has given up 0.8%.

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The bad news: July has been falling in the monthly performance race in recent decades. In the past 100 years, July ranks No. 2, with average gains of 1.4%. But in the past 50- and 20-year periods, it ranks sixth among the 12 months.

Still, a quiet, lazy July on Wall Street is better than the alternative: a stock market meltdown scary enough to get you off the beach and on the phone with your stockbroker or adviser wondering what to do.

Of course, history never repeats itself exactly. But it's refreshing to know that seasonality is on your side in July.

By Adam Shell, USA Today