October is an interesting month, as the last remnants of summer disappear, the leaves produce glorious colors and we give away candy to kids dressed in costumes as fall slides hopelessly into winter.
For stock market investors, however, October this year and just about every year can be frightening, as many of the worst times to be invested in the stock market all happened in October. In fact, of the 10 largest one-day percentage drops in the DJIA, 50% of them occurred in October.
As we enter October of 2022, glass-half-empty-investors are worried, as there are a number of topics that could make our current 2022 downturn even worse, including:
• Rising inflation;
• Rising interest rates;
• Continued supply chain issues ahead of the all-important holiday season;
• Depressed corporate earnings;
• Fickle consumer sentiment; and
• A noticeably cooler housing market.
Could another terrifying October crash happen again?
Past October Crashes
The Panic of 1907: The Panic of 1907 – also known as the 1907 Bankers' Panic or Knickerbocker Crisis occurred over a three-week period starting in mid-October, when the New York Stock Exchange fell almost 50% from the previous year’s peak. It lasted six weeks.
The Black Tuesday Crash in 1929: The Stock Market Crash of 1929 began on October 24th and was brutal. It left record-setting days in the history books, including:
• October 24, 1929 – the market lost 11%
• October 28, 1929 – the market lost 13%
• October 29, 1929 – the market lost 12%
The Black Monday Crash in 1987: On October 19, 1987, the market crashed suddenly and severely. Fueled by stop-loss orders and panic selling, the DJIA plummeted 22% in one day. It was the largest one-day drop, in percentage terms, in history.
It’s About Time & Perspective
It’s easy to worry that of the 10 largest one-day percentage drops in the DJIA, 50% of them occurred in October. But guess what?
Of the 10 largest one-day percentage gains in the DJIA, 50% of those happened in October too, including:
- the day after the crash of 1929 when the market jumped 12.34% on October 30, 1929
- two days after the market crash of October 1987, when the market jumped 10.15% on October 21, 1987
Time in the markets beats timing the markets. How often do you wish you invested over any 20 or 30 years in the market? Time diffuses the market’s volatility and a well-diversified portfolio best protects you against cataclysms anywhere. Start saving and investing today. And don’t worry that an October crash is coming.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.