October Stock Market History: A Deep Dive into Performance and Crashes

October is often considered a volatile month for the stock market, with a history of significant downturns and crashes. The month has seen some of the most notable market downturns in history, including the 1987 crash and the 2008 global financial crisis.

In fact, the 1987 crash was triggered by a massive sell-off on October 19th, which wiped out nearly 23% of the market's value in a single day. This event is still remembered as one of the worst days in stock market history.

The 2008 global financial crisis, which began in October, had a profound impact on the stock market, leading to a 38% decline in the S&P 500 index over the course of the month. This crisis marked a turning point in the market's performance, leading to a prolonged period of volatility and uncertainty.

The NYSE Composite has shown consistent seasonal patterns over the past 20 years, with April, July, October, November, and December being the best months, while January, February, June, August, and September are the worst.

The S&P 500 has also displayed seasonal patterns, with March, April, May, July, October, November, and December being the best months over the last 20 years. However, over the last 10 years, March, April, May, June, July, October, and November are the strongest months.

Here's a comparison of the best and worst months for the NYSE Composite and S&P 500 over the last 10 years:

The Nasdaq 100 has shown a slightly different pattern, with January, March, April, May, July, August, October, and November being the best months over the last 20 years. Over the last 10 years, January, March, April, May, June, July, August, October, and November are also the best months, with February, September, and December being the worst.

The S&P 500 has some clear seasonal patterns that can be useful to know. Over the last 20 years, the S&P 500's best months are March, April, May, July, October, November, and December.

The worst months for the S&P 500 over the last 20 years are January, June, August, and September. This is based on data from the SPDR S&P 500 ETF (SPY).

Breaking it down further, over the last 10 years, the S&P 500's best months are March, April, May, June, July, October, and November. The worst months over this period are September and December.

Here's a summary of the S&P 500's best and worst months over the last 10 years:

The US stock market has an overall upward bias over the long term. This means that despite some fluctuations, the market tends to rise over time.

The S&P 500 has produced 10.6% yearly returns over the last 100 years, and the Nasdaq 100 has produced returns of 14.7% per year over the last 20 years. These numbers show that investing in the long term can be a good strategy.

Even during months with a high probability of rising, it's essential to use stop losses and risk control to protect your investments. This means being prepared for potential drops and not getting caught off guard.

The pre-holiday rally pattern is a phenomenon where stock prices tend to drift up before a long weekend or holiday due to lower trading volume and positive expectancy.

Trading volume is often lower heading into long weekends, which can help explain the price drift up.

People may be feeling good about a long weekend and buy some stock, contributing to the pre-holiday rally pattern.

Short-term traders can take advantage of this pattern by buying one or two days prior to the holiday and selling one to two days after.

Longer-term traders can also use this opportunity to pick up stocks they were eyeing.

According to QuantifiedStrategies, most holidays don't produce a big pop in stocks, but a few are more reliable and tend to produce positive returns over time.

History suggests that these reliable holidays are better for deploying the pre-holiday rally strategy.

The October effect is a phenomenon that has been debated among investors for a long time. The data suggests that it isn't real. In fact, since 1928, stocks have, on average, risen in the month of October by more than 0.6%.

Many investors believe in the October effect, perhaps because of the negative events that have occurred in the past, such as the 1987 Black Monday crash. However, these events have been exaggerated over time, and the media has contributed to the myth.

The numbers don't support the October effect. If we look at all October monthly returns going back more than a century, there simply is no data on average to support the claim that October is a losing month.

The S&P 500 has produced 10.6% yearly returns over the last 100 years, and the Nasdaq 100 has produced returns of 14.7% per year over the last 20 years. This shows that the stock market has an overall upward bias over the long term.

The best months for the S&P 500 over the last 20 years are March, April, May, July, October, November, and December. The worst months are January, June, August, and September.

Here's a summary of the best and worst months for the S&P 500 and the Nasdaq 100:

Investors should be aware that the average monthly return numbers can be skewed by extremely large falls or rises in a particular year. Therefore, it's essential to use stop losses and risk control, even during months that have a high probability of rising.

Contrarian investors like the negative effect on the markets that stems from a belief that October is the worst month for stock market declines. They take advantage of the buying opportunities that can pay off once the unjustified fear abates.

The media likely plays a role in perpetuating this negative expectation. The press has a history of labeling events in eye-catching ways, which can contribute to the widespread belief in the October effect.

Some investors may be nervous during October because of large, historical market crashes that occurred during this month. The media's sensationalized reporting can fuel this anxiety.

The New York Times and CNN Money have both reported on significant market drops in October. For example, in 1987, the Dow plummeted 22.6% in a single day, one of the worst single-day declines in market history.

However, most statistics contradict the theory that October is a bad month for the stock market. In fact, October's 100-year stock market history has been net positive.

The October stock market history is a fascinating topic, and one that's often shrouded in myth. The October effect refers to the psychological anticipation that financial declines and stock market crashes are more likely to occur during this month than any other month.

Several major market crashes have indeed occurred in October, including the Bank Panic of 1907, the Stock Market Crash of 1929, and Black Monday 1987. This might lead you to believe that October is a particularly volatile month for the stock market.

However, it's worth noting that September has actually had more down markets than October historically. This might suggest that the October effect is more of a psychological phenomenon than a reflection of actual market trends.

The psychological influence of the "October effect" can actually present investors with choice investment buying opportunities that can pay off later. This is because some traders may be selling off their stocks in anticipation of a crash, creating a buying opportunity for contrarian investors.

October has a reputation for being a volatile month for stocks, with more 1% or larger swings in the S&P 500 than any other month in history.

The Panic of 1907 and the 1929 crash both had catalysts that set off the market reactions in September or earlier, with the market reaction being delayed until October.

The Dow Jones Industrial Average lost 12.8% on Monday, October 28, 1929, and another 11.7% the next day, setting off the Great Depression.

Stocks have, on average, risen in the month of October by more than 0.6% since 1928.

Here are some notable stock market crashes in October:

The stock market has experienced its fair share of crashes throughout history. Some of the most notable ones include the 1929 Crash, which began on October 24 and left several "black" days in the history books.

The Panic of 1907 led to the creation of the Federal Reserve Board and the 12 Federal Reserve Banks as "lenders of last resort." This was a major turning point in the history of the stock market.

October is traditionally the most volatile month for stocks, with more 1% or larger swings in the S&P 500 than in any other month. This is partly due to the fact that October precedes elections in early November.

Some of the most significant crashes occurred in October, including the Panic of 1907, Black Tuesday (1929), Black Thursday (1929), and Black Monday (1987). These events are often referred to as "black" days.

The catalysts for the 1929 crash and the 1907 panic were triggered in September or earlier, but the market reaction was delayed until October. In 1907, public skepticism about trust companies came to a head in October, sparking a run on the trusts.

The Dow Jones Industrial Average lost 12.8% on Monday, October 28, 1929, and another 11.7% the next day. This was a devastating blow to the stock market.

Here are some of the most significant stock market crashes in October:

The Federal Reserve and other central banks intervened in 1987 to help stabilize the market after the 22% drop on Black Monday.

The US stock market has an overall upward bias over the long term.

The S&P 500 has produced 10.6% yearly returns over the last 100 years, which is a testament to the market's historical growth.

The Nasdaq 100 has produced returns of 14.7% per year over the last 20 years, outpacing the S&P 500.

The Russell 2000 has produced an average yearly return of 8.4%, a respectable figure for a smaller-cap index.

Since 1928, stocks have, on average, risen in the month of October by more than 0.6%.

October has averaged a 0.6% price gain from 1928 through 2022, according to Yardeni Research.

The four best months are July (20.5% annualized), April (16.8%), December (15.6%), and January (14.4%).

Three months have averaged negative returns: September, February, and May.

September is the worst, annualizing to negative 13.2%, a stark contrast to October's gains.

Bear in mind that these are just averages, or tendencies, and not guarantees of future performance.