Posted by Anna Traugh on October 14, 2021
Anecdotally, October has been considered a bad month for the stock markets. This is the month associated with many market crashes, leaving some investors fearful each year as the month approaches and leading to the term “The October Effect”. But actually, poor October is getting a bad rap.
There is no denying that the stock market crash of 1929 started on October 24th, and that October 19, 1987 is considered “black Monday”. But there have been more market downturns in September than October. Also, the factors leading up to the crash of 1929 began in February, when the Fed banned margin-trading loans and raised interest rates[i]. Let’s not shoot the piano player.
So, rest easy, there is no one month of the year that can be relied upon to be better or worse for investment returns than any other month. Markets react to the news as it happens. That’s why we advocate for a well-diversified portfolio and keeping an eye on the long horizon.
So go and enjoy your pumpkin latte!
[i] https://www.investopedia.com/articles/financial-theory/09/october-effect.asp
