Gary Coleman and the “September Effect”
During this Labor Day weekend, I watched a Gary Coleman documentary.
It was really sad and kinda depressed me.
On the one hand, he was celebrated for being one of the most talented child stars, but on the other hand, he went into depression and despised his celebrity status because he was taken advantage of by his wife, parents, business manager and agent.
At a certain point in his career, Coleman didn’t even want to continue his entertainment career but felt like he had to, in order to keep making money for everyone around him.
His own parents even petitioned the courts for a conservatorship over their son, even though he was an adult.
(Yes, this is what happened to Brittany Spears, except her parents actually succeeded in that conservatorship, whereas this was probably one of Coleman’s only triumphant moments.)
It’s not Gary Coleman’s fault, and yet, that’s what makes me so sad. I don’t know if this is actually true, but according to the documentary, he had about $18 million stolen from him!
The documentary reminded me of how many child stars end up in an unhappy place because they may have not had an opportunity to truly develop their own self worth and also as children, we don’t understand money yet, so the people around them need to be trustworthy enough to manage the money in that child’s best interest.
(Also, on a side note…business managers should be FIDUCIARIES.)
This is why I want you to understand your money. Even if you are on a hit TV series or a major movie and you have financial/investment advisors and business managers helping you, it’s still SO IMPORTANT that you understand what’s going on, so that no one can take advantage of you.
Even a fiduciary, who is legally bound to put your interest above their own, may not always know what’s best for you. Only YOU know what’s best.
It’s why I had decided early on to be a financial coach, rather than a financial advisor. I went back to school, going through a very rigorous 9 month program through UC Berkeley, where I studied Taxes, Estate and Education Planning, Insurance, Retirement Planning, Behavioral Finance, Economic Principles, and of course, Investments.
However, because I’ve seen three women in my life stay in abusive relationships because of the lack of money and resources, my mission is to help everyone I know to make their own decisions, not based on money.
I also decided to be a coach because I want to coach and teach you to understand the concepts I studied and to be able to apply it to your situation and to make decisions for yourself, EVEN IF you have a fiduciary advisor or business manager. It’s also why I create free content, challenges and workshops like the 5 Days to Financial Freedom Challenge that just ended two weeks ago.
It’s also why this month, I’m going to teach you some basics of investing. I want to teach you these concepts in September for two reasons:
September is the other January, meaning since most schools start in September, it’s a good time to start a new goal, to learn a new skill and to make some habits really stick.
September is historically known for the stock market going down. It’s called the “September Effect,” so it’s a good time to learn how to deal with this phenomenon.
No one really knows why the stock market goes down each September, but since 1928, the S&P 500 has declined an average of 1.1% in September, the ONLY MONTH with a negative average return.
Some experts have cited these factors as contributing to the “September Effect”:
Summer holidays: During the summer months, particularly from June to August, trading volumes typically decrease as traders and investors go on summer vacation. When investors finally return in September, they often rebalance their portfolios, selling off underperforming stocks
Delayed reaction to bad news: Over the summer, with fewer eyes on the market, bad news may not immediately impact stock prices. However, when traders return in September, the market begins to react to this accumulated bad news, leading to a potential sell-off. Research has shown that stock prices generally respond more slowly to negative news, especially during periods of low trading activity, like the summer
Institutional portfolio rebalancing: Many mutual funds and institutional investors close their fiscal year in September. To optimize their portfolios, these institutions often sell off losing positions before the end of the quarter, which can add downward pressure to the market. This behavior is similar to year-end tax-loss harvesting but occurs earlier in the year
Bond market dynamics: September often sees a spike in bond issuances as companies and governments seek to raise capital after the summer lull. Higher interest rates during this time can make bonds more attractive, and this shift from stocks to bonds during September can lower stocks
Market psychology: The September Effect may also be a self-fulfilling prophecy. Traders and investors, aware of the historical trend, might anticipate a decline and adjust their strategies accordingly, which can exacerbate the sell-off. Also during this time of the year, the need to fund educational expenses or prepare for end-of-year expenditures, may also prompt individual investors to sell stocks in September.
So, what should YOU do during this month of September? (Remember this is for educational purposes and not intended to be financial advice.)
Learn more about stocks and investments, so that you will be able to make the best decisions about your money.
If you have stocks, don’t look at your portfolios this month. Even if the market doesn’t go down, it’s just a weird month to check, especially if you get anxious when the markets go down.
If you’re not the anxious type, then this may be a good month to actually buy more stocks! If the price of a certain company’s stock is down (or essentially at a discount), why not buy?
Do what the mutual funds and institutional investors do and sell off some of the stocks that haven’t done well this year, especially if you had sold stocks earlier in the year and those stocks were winners. You can balance out how much you’ll pay in capital gains tax by doing this. Traditionally, people do this at the end of the year, and it’s called “Tax Loss Harvesting,” but if you understand what you’re doing and you don’t think you’ll be selling more stocks before the end of the year, you can also go with the trend. However, this last one is a bit trickier and one that I wouldn’t recommend to beginners. You may also want to check with your accountant.
With Love & Gratitude,
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