September is upon us once again. It keeps coming around year after year, and each year investors have to decide how they are going to allocate their portfolios during this much-maligned month.

According to Jeffrey Hirsch, the author and publisher of the Stock Trader’s Almanac, September has historically been the worst performing month, on average, for the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite. Since 1950, the Dow has lost 1.1%, the S&P 500 has lost 0.7% and the Nasdaq (not established until 1971) has lost 1%, on average, during the month of September. Scary, right?

Let’s get this out of the way right up front…we are somewhat skeptical of almanac investing. We don’t believe that September, for instance, has some voodoo curse on it that makes stocks drop. If it did, the market wouldn’t have risen during September in 2012, 2010, 2007, 2006, 2005, 2004, 1998, 1997, 1996, 1995 and 1992. That’s right, the market made gains in September during 11 of the past 21 years.

That’s why the phrase “on average” is so important when all of these almanac stats are bandied about. September has certainly seen its fair share of large declines (-8.17% in 2001, -11% in 2002, -9.08% in 2008 and -7.18% in 2011), but these big declines tend to skew the averages.

However, even though we aren’t willing to write September off as a lost cause just yet, we do believe digging into the fundamental factors that have caused September declines in the past is quite worthwhile, just in case they come into play again this year.

Past Fundamental Factors

Some of the fundamental factors that drove stocks down in Septembers past, such as the 9/11 attacks in 2001 and the collapse of Lehman Brothers in 2008, probably aren’t going to play a role in determining where stocks go in September 2013. On the other hand, there are some fundamental factors that could affect stock prices again this year.

One such factor revolves around mutual funds. Sept. 30 marks the end of the fiscal year for many mutual funds. As such, many mutual fund managers start to clean house to take advantage of any strong gains that can be offset by strong losses. This means that fund managers will sell some of their worst-performing investments to realize their losses and offset the profits they have realized from their best-performing investments. This selling of both weak and strong stocks can put additional pressure on stock prices in general.

Here’s the thing: Retail investors have been moving out of mutual funds and into exchange-traded funds (ETFs) and other investment vehicles in droves. The mutual fund industry is still a large force in the financial markets, but this fundamental factor may be somewhat muted in years to come.

Some have also attributed a September selloff to the fact that many traders take time off during the summer months and come back to work en masse just after Labor Day. These traders then proceed to sell all of the stocks in their portfolio that they no longer like, driving down prices. We’re a little skeptical of this rationale, but we thought it was worth a mention.

Current Fundamental Factors

So what are the fundamentals factors that we face in the market right now?

The U.S. government is trying to decide if/when to attack Syria. That has nothing to do with the fact that it is September. The relationship between these two things is coincidence, at best.

The Federal Reserve’s Federal Open Market Committee (FOMC) is debating when to start tapering its quantitative easing (QE) purchases of U.S. Treasuries and agency mortgage-backed securities (MBS). The fact that most investors expect the FOMC to make its announcement after its September meeting is, once again, coincidence at best.

Congress is gearing up to debate whether or not it is going to raise the debt ceiling once again. A botched debt ceiling debate in August 2011 did continue to help weigh the market down in September 2011, but the deadline issued by Treasury Secretary Jack Lew doesn’t really hit until October, so we may miss the fallout from this one this September.

The Bottom Line for Next Week

Could this September be a terrible month on Wall Street? Yes, it could. There is plenty of potential negativity out there to drag stocks lower. However, with the S&P 500 and the Dow bouncing up off key support levels, this could just as easily turn into a positive September to remember.