The stock Market Is Bearish in September: Fact or Superstition?

How true is the superstition about September’s stock market bearishness? This September, who will take charge, bulls or bears? 

| More on:
question marks written reminders tickets

Image source: Getty Images

There is a stock market superstition that September is the worst month for investing. It is true that the markets worldwide showed some bearishness in September, but it’s not the worst month. One possible reason for the bearishness is the fiscal year-end for most mutual funds, as they cash in loss-making holdings to get a tax benefit. The September effect is fading as the TSX Composite Index surged 2.4% in September 2019, but it dipped 2.19% in September 2020.

How is the TSX placed for September 2021? 

In September 2020, the market dipped as the Justin Trudeau government ended the $2,000/month Canada Emergency Response Benefit (CERB). There was uncertainty around the Canada Recovery Benefit (CRB). Moreover, that was also the month of filing taxes. The 2020 stock market rally, which was fuelled by the stimulus money, cooled as investors cashed out to pay for their expenses and taxes. 

But that is not the case this year. There is no income tax filing this month. Moreover, the government has extended the revised $300/week CRB from September 25 to October 23, 2021. The job market has also improved. So the possibility of lower liquidity in the hands of investors is ruled out. 

Moreover, the borders are reopening. There is a hurdle of the fourth wave, but that could lead to phased reopening and not a complete lockdown. Another factor is pent-up demand, but the lockdown has been holding off the economic recovery. I expect bulls to charge this month. 

Three stocks to buy in September 2021 

The International Monetary Fund expects Canada’s gross domestic product (GDP) to grow 6.3% in 2021. You should take this opportunity and buy three stocks that could ride the bull run of economic recovery. Canada is the third-largest oil reserve in the world. This means oil stocks could return to recovery after three months of decline. 

Suncor stock

As Canada’s largest integrated oil company, Suncor Energy (TSX:SU)(NYSE:SU) will benefit from the pent-up oil demand. As travel restrictions ease, people will return to flying and long drives. Demand for jet fuel, gasoline, and diesel will pump cash into Suncor’s retail segment. That could drive the stock to its June high of $30, a 28% upside. 

As for its oil production segment, it is facing environmental concerns around the carbon emission from the oil sands project. The company, along with other oil producers, has laid out a $75 billion initiative to reduce CO2 emissions. This investment could reduce shareholder returns, preventing the stock from returning to its pre-pandemic level of $40. But I would suggest buying the stock for the 28% upside. Also, the management plans to increase dividends in the next five years. 


Canada’s non-prime lending and leasing service goeasy (TSX:GSY) will benefit from economic growth. Last year, the company saw weakness in loan origination as many people lost their jobs, which reduced their spending. However, goeasy saw an increase in loan repayments as people used the stimulus money to pay their debt. As the economy recovers, the company is seeing the return of consumer spending habits. A glimpse of recovery was visible in the second-quarter loan originations that increased 122%. 

goeasy stock has surged more than 200% in a year, and there is more growth ahead as the company benefits from the synergies LendCare acquisition brings. Plus, it expects organic growth from the buy-now-pay-later option at the point-of-sale (POS).

Bitfarms stock 

The current rally of Bitcoin is getting even stronger. Some of the richest individuals in the world, like Elon Musk and Mark Cuban, back Bitcoin. El Salvador also made BTC official currency. There will be ups and downs, but BTC is here to stay. Luckily, TSX offers some lucrative options to get exposure to BTC prices. One of them is Bitfarms (TSXV:BITF). It operates five crypto mining facilities in Canada. The company has BTC inventory, and its stock price moves in tandem with BTC price. 

If another crypto wave is on the horizon, you better hurry and grab a position in the stock while it is still cheap. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Energy Stocks

Solar panels and windmills
Energy Stocks

Algonquin Stock Has Broken Investors’ Hearts, but I Think It Will Turn a Corner

AQN stock faces more uncertainty in 2023, but could be a compelling value pickup for income investors.

Read more »

energy industry
Energy Stocks

2 Top Energy Stocks to Buy Right Now

These energy companies remain immune to the economic and commodity down cycles.

Read more »

green power renewable energy
Energy Stocks

The 1 Dividend Stock Every Retiree Should Buy for Passive Income

Here's why I think Fortis is one top dividend stock that isn't getting the kind of love it deserves from…

Read more »

energy industry
Energy Stocks

Missed Out on Canadian Energy Stocks? My Best Dividend Stock to Buy and Hold

Altagas stock is my best stock to buy to get in on the Canadian energy stock rally, and a dividend…

Read more »

Hands holding trophy cup on sky background
Energy Stocks

Could Cenovus Stock Be a Big Winner in 2023?

Although oil and gas prices have weakened, Cenovus stock remains a very undervalued gem, as returns should ramp up in…

Read more »

green energy
Energy Stocks

Top Renewable Energy Stocks in Canada in January 2023

Renewable energy stocks appear to be a solid investment for saving the environment, generating strong capital gains and earning consistent…

Read more »

oil and gas pipeline
Energy Stocks

Could Enbridge Be a Big Winner in 2023?

Enbridge delivered solid returns in 2022. Is ENB stock a buy for 2023?

Read more »

oil and natural gas
Energy Stocks

Are These 2022 TSX Energy Stars Still Buys in 2023?

Energy stocks were star performers on the TSX in 2022, as oil prices surged above US$80. Will they continue their…

Read more »