October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. — Mark Twain
Octobers seem to be a spooky month and I’m not talking about Holloween. That’s because a few big market crashes give October a bad name — October 1929, 1987, and 2008. Those three Octobers were the three worst Octobers respectively.
So 2018’s October ends up being the 9th worst October for the S&P 500 at -6.9% for the month.
Yet historically, Octobers have been fairly tame, except for the outliers. The average S&P 500 return for the month of October is only 0.5%.
And when you compare October to all the other months, it looks less spooky.
| S&P 500 Monthly Returns 1871 – 2018 | |||||||
| Month | Avg. Return | # Up | # Down | Avg. Up Return | Avg. Down Return | Best Return | Worst Return |
| January | 0.32% | 77 | 71 | 2.93% | -2.51% | 11.30% | -11.85% |
| February | 0.29% | 82 | 66 | 2.43% | -2.36% | 7.04% | -9.83% |
| March | 0.61% | 90 | 58 | 2.85% | -2.86% | 12.02% | -23.97% |
| April | 0.12% | 90 | 58 | 3.08% | -3.36% | 28.74% | -13.77% |
| May | 0.03% | 82 | 66 | 2.48% | -3.02% | 17.14% | -13.43% |
| June | 0.81% | 91 | 57 | 2.92% | -2.55% | 19.88% | -11.67% |
| July | 0.85% | 93 | 55 | 3.17% | -3.08% | 50.30% | -10.56% |
| August | 0.24% | 89 | 59 | 2.66% | -3.41% | 11.58% | -14.89% |
| September | -0.31% | 77 | 71 | 2.75% | -3.63% | 11.15% | -20.39% |
| October | 0.50% | 87 | 61 | 3.22% | -3.37% | 10.84% | -26.47% |
| November | 0.35% | 85 | 62 | 2.51% | -2.61% | 9.41% | -18.77% |
| December | 1.50% | 102 | 45 | 2.94% | -1.75% | 9.20% | -9.83% |
P.S.: 0% returns were considered “Up” (i.e. non-negative). Data through October 2018.
It looks like December gets the prize for the best month. And September is actually the worst month on average. So it seems October gets blamed for what September started.
Source:
The Tragedy of Pudd’nHead Wilson – Mark Twain
Monthly S&P 500 Data – Multpl.com
Last Call
- An October Surprise? Making Sense of the Market Mayhem! – Musings on Markets
- Not Learning From Investing History Can Be Hazardous to Your Wealth – Behavioral Value Investor
- The Quant Frontier – J. Catherwood
- The Relative Anchor in Rates – A Wealth of Common Sense
- The Dark Side of Low Volatility Stocks – Factor Research
- The 5 Kinds of Bounces – Pension Partners
- No One is Crazy – M. Housel
- The Underappreciated Role of Luck in Investing – ValIdea
- The Surprising Power of the Long Game – Farnam Street
- 2019 Long-Term Capital Market Assumptions – JP Morgan
- The Story of Milton Hersey: The Sweetest Place On Earth – Intelligent Fanatics