Why do most investors see October as a scary month?

Posted By on October 10, 2014

Investors have a love-hate relationship with the month of October. It is a volatile month and has had its share of stock market ups and stock market downs. Those of us who were around and investing in 1987, we mostly remember the “down.” In those days before Internet investing, hearing and seeing share prices drop 20% in and instant was painful… we don’t easily forget the pain.

The memories are still vivid to me as I had just remodeled a new building for my company (old photos) and signed an order for a new printing press at the big Print Expo trade show in Chicago. To fund this purchase we planned the sale of stock from my previous job and my wife’s stock purchase plan. Along came Black Monday and we took big hit on on our investments that we now had to sell to pay for this new equipment. The DJIA dropped 22.61% in one sickening day (see chart below). To make matters worse, this particular offset press ended up not being one of the more productive pieces of equipment in our shop; it sat idle on most days. It did prove to be both a lesson in equipment purchasing and financial investing … especially when it comes to the month of October.

For some perspective as to the size of the 1987 one day event … visualize the the current day DJIA 17,000 dropping 3845 points in a single one day move … that’s 14 times as large as the 270 point swings we had this past week.

djia19870619-19880119
Black Monday – October 19, 1987

Comments

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.
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