Is October Really That Bad for Stocks?
Investors have for a long time feared October and embraced August. October, of course, is the worst average month for stock returns with the Great Depression beginning in October. August, on the other hand, performs well, which has been attributed to a Congress on recess.
October’s Returns
Other than a few choice dips, October actually hasn’t been all the bad. 1929 and a minute “crash” in 1987 both happened in October, obviously weighing heavily on the statistics. However, throwing out the Great Depression and considering returns of the S&P500 post-WWII we get an average increase of 1.1% in the month of October. On average, the S&P 500 has returned .7% per month. Though its too early to start talking about what the current downturn will be named (Great Recession seems popular) this “downturn” escalated last October. Food for thought.
What About This October
Stocks enter October at their highest levels for 2009 and just under strong resistance. Though it would be hard to stake the claim that in fact October is anti-stock markets by nature, this October looks like it will live up to the name. In the first few days of trading the markets have already tossed several hundred points from the Dow Jones Industrial Average.
A Little Bit of Sunshine
Of the last 9 bear marketss in the United States (not including this one,) five of them ended in October. That’s good news, clearly October is well represented in taking 55% of the turnarounds yet only encompassing 1/12th of the calendar.
