September 6: The Traditional Market Peak

Yesterday was September 6 which is the traditional peak of the stock market. From September 6 until October 29, the Dow Jones Industrial Average has lost an average of 2.25%.

That may seem small but it’s very large for an average of 125 years. After October 29, the market perks up again and does well through the new year.

Here’s what the average stock market year looks like. I used a base of 100 on January 1.

After Friday’s jobs report, I tweeted, “There are 108.4 million Americans who are either unemployed or out of the job market entirely.”

This tweet got some pushback, and some of it sarcastic, pointing out that children, the disabled and the elderly are to blame.

I thought this criticism was interesting because it highlights an important distinction between how economists view the economy and how normal people view the economy. (In this case, non-economists are normies and economists are not.)

The non-economists stressed that retired people and others aren’t to blame. They have an excuse to not work. They view the issue through a narrative of someone’s actions being to blame.

But here’s the important part: the economy doesn’t care. The economy is amoral. It doesn’t matter if you’ve earned your retirement or not. The economy only cares about the ratio of workers to non-workers. Desert has nothing to do with it.

Imagine if you’re a castaway on an island with six other people. Everyone works, but as the years go by, the other castaways may have to retire from the daily labor. By the end, you may be the only one working to support the others. Saying they have an excuse may indeed be accurate, but it doesn’t matter to your little island economy. Again, all that matters is the ratio of workers to non-workers.

Pointing out the retired or disabled folks isn’t contradicting the point; it is the point.

Posted by on September 7th, 2021 at 11:51 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.