Is October a Terrible Month for the Stock Market?

Many people believe that October is a scary month. Halloween is just around the corner and everyone is gearing up to scare one another with ghost stories, haunted houses, and scary costumes. But that’s not all. This month is known for something else.

Hello, everyone! My name is Antoaneta. Today, I’ll discuss the common belief that October is a scary month for investors. Before anything else, don’t forget to click the like and subscribe button. Feel free to check our other investing blogs such as, “Top Stock Picks For October” and leave your comments below. I’d love to hear from you.

Some investors fear the month of October because of the Black Tuesday stock market crash that happened on October 29, 1929. It triggered a bear market that caused the Dow Jones Industrial Average to slump by almost 90% from its highs during the time of the Great Depression.

The 1987 market crash took place on October 19, which was a Black Monday. The 2008 market plunge started in September but some most notable drops, including two of the 20 biggest percentage declines for the Dow, took place in October during the global financial crisis.

Now that October is here, the markets are starting to get jittery once again. Some investors recalled the 2008 Lehman Brothers after news broke out that Evergrande, China’s real estate firm, may possibly go into a debt default. Some are also becoming more worried regarding the economy’s strength due to the ongoing pandemic and inflationary pressures.

What’s the problem with October? Is it really scary to invest during this month? Is there a looming stock market crash?

And the Answer is…. NO!

You shouldn’t change your whole investing strategy just because it’s the month of October. What you need to do instead is to add stocks that you can hold regardless of the stock market condition and enjoy long-term gains.

Of course, you also have to check the numbers. October is the not worst month for the stock market. If you look at history, the market ended with a positive return of almost 60% during the 1920s. During that time, September ended with a decline while February and May also posted losses on average.

Does this Mean October is Safe?

Market psychology will always play a crucial role in the overall market. Even if you check the numbers, the market will be affected if a group of motivated investors decides to make the same move. They can keep the stock price moving irrationally for a very long time.

Having said that, investor psychology may turn an irrational fear for the month of October into reality. When the markets begin to lose ground, some investors may start running towards the exit. Others may start considering tax-loss harvesting. When this happens, there will be more pressure to sell on the market.

Always Be Prepared For Downturns – October or Not!

The truth remains that market plunges and corrections don’t happen only during October. Don’t believe everything you hear. In 2020, the largest market drop happened in February and March. In 2018, major market changes took place during January and December.

If you’re a smart investor, you know that you can’t avoid downturns. Instead of letting yourself feel scared of a possible downturn, you should remember that understanding the risk from stock investing is what makes it possible to get strong returns. If you consider the long-term gains in the shares of the top companies these days, you will realize that major crashes are significant.

So enjoy Halloween. Dress up in your favourite costume, and have fun with the October fright fest. Stop worrying about your stock market investments. It’s normal to see a downturn and it won’t affect the long-term gains that you’ll enjoy if you have great stocks in your portfolio.

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