Every August, you’ll hear it—the whispers about Ghost Month. Suddenly, people hesitate to make big moves: no house purchases, no weddings, and definitely no investments. Markets turn into a haunted house where traders are too spooked to enter.
But here’s the twist: Ghost Month might actually be one of the best times to put your money to work.
Historically, August, commonly known as “Ghost Month” in East Asian cultures, has exhibited a challenging performance in financial markets from 1987 to 2023. During this period, the average return for stocks in August has been -2.9%. This negative trend is largely influenced by severe market downturns, particularly notable during the 1990s. For instance, the market experienced a dramatic -20% return due to significant events like the “Power Crisis” and the “Asian Financial Crisis,” which had profound and lasting impacts on investor sentiment and market performance.
However, this historical downturn is contrasted by a more recent positive shift. Since 2016, August has shown an encouraging reversal in trend, with an average return of +0.6%. This improvement reflects a period of increased market stability and resilience, suggesting that the adverse impacts of past crises may be lessening. The positive return since 2016 indicates that investors have adapted to or mitigated the seasonal challenges traditionally associated with Ghost Month, demonstrating a capacity for market recovery and adaptation.
Thus, while historical data highlights a period of volatility, the recent positive trend in August returns underscores a potential shift towards more favorable market conditions, offering a more nuanced perspective on the performance of financial markets during Ghost Month.
Where did Ghost Month come from?
Ghost Month is rooted in Chinese tradition, observed during the 7th month of the lunar calendar. It’s believed that during this time, spirits roam the earth, so people avoid major decisions to ward off bad luck.
Now, culture and tradition deserve respect. But when it comes to investing, your portfolio should be guided by research—not rumors.
Myth vs. Market Reality
Let’s bust some myths:
- “Stock prices always fall during Ghost Month.”
Not exactly. If you check historical market performance, the dips in August are more often tied to real-world events (like earnings reports or global news), not spirits sneaking into the trading floor. - “Investing in August is unlucky.”
Luck has little to do with stock prices. Earnings, economic growth, and company fundamentals move the market. - “It’s safer to stay on the sidelines.”
Sitting out means missing opportunities. Prices can be more attractive during periods when others are overly cautious.
Why August Could Be Your Sweet Spot
Here’s what investors who don’t ghost the market enjoy:
- Discounted Prices – While others hesitate, you could scoop up quality stocks at better valuations.
- Less Noise, More Logic – With fewer active traders, the market may move slower, giving you space to analyze carefully.
- Strategic Positioning – Buying during dips means you’re better positioned once sentiment swings back.
Think of it like a mall sale. Sure, some people may avoid shopping—but if you’ve done your homework, you’ll walk away with the best deals.
The Real Ghostbuster: Research
Fear is the biggest ghost in investing. And the only way to chase it away is with solid research and analysis. Instead of relying on myths, rely on market data: company performance, sector outlooks, and economic trends.
That way, you’re not just making decisions—you’re making smart ones.
In a Nutshell…
Ghost Month doesn’t have to be scary for investors. In fact, it can be a golden window of opportunity if you look beyond superstition. So while others are hiding under the covers, you could be building your portfolio. After all, in the market, it’s not about avoiding ghosts—it’s about avoiding missed opportunities.
