{"id":21985,"date":"2023-09-25T13:35:55","date_gmt":"2023-09-25T13:35:55","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/why-october-is-a-special-month-in-the-stock-market\/"},"modified":"2023-09-25T13:35:56","modified_gmt":"2023-09-25T13:35:56","slug":"why-october-is-a-special-month-in-the-stock-market","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=21985","title":{"rendered":"Why October Is A Special Month In The Stock Market"},"content":{"rendered":"<div>\n<p>We are coming up on a seasonal turning point in the stock market.<\/p>\n<p>October is special for three reasons:<\/p>\n<ul>\n<li>It is the month when history\u2019s most spectacular market crashes have occurred, most famously in 1929 and 1987.<\/li>\n<li>Yet it is actually, on average, a pretty good month.<\/li>\n<li>Based on historical price patterns, stocks are likely to chug ahead in the fourth quarter.<\/li>\n<\/ul>\n<p>Let\u2019s look at this a little more closely.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Crashes<\/h2>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>Few people alive today remember the crash of 1929, but we all learned about it in school or from studying market history. The Dow Jones Industrial Average lost 12.8% on Monday, October 28, 1929, and another 11.7% the next day. The Great Depression followed.<\/p>\n<p>Fast forward 58 years to October 19, 1987. The industrial average lost 22.6% in a single day, the worst one-day crash ever.<\/p>\n<p>Those were the three worst October crashes, but not the only ones. Seven of the Dow\u2019s ten worst days occurred in October.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">October Performance<\/h2>\n<p>Despite October\u2019s fearsome reputation for being crash-prone, it is usually not a bad month. It has averaged a 0.6% price gain from 1928 through 2022, according to Yardeni Research.<\/p>\n<p>Annualize that and you get 7.2%. That\u2019s the same as March or August, and about middle-of-the-back.<\/p>\n<p>The four best months are July (20.5% annualized), April (16.8%), December (15.6%) and January (14.4%).<\/p>\n<p>Three months have averaged negative returns. September is the worst, annualizing to negative 13.2%. February and May average negative 1.2% annualized.<\/p>\n<p>Oh and if you must know, the returns for the remaining months are 9.2% annualized for June, and 10.8% for November.<\/p>\n<p>Bear in mind that these are just averages, or tendencies. They are not even within a stone\u2019s throw of being guarantees.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Fresh Worries<\/h2>\n<p>Will this October follow the typical pattern and end up with a moderate gain?<\/p>\n<p>Pessimists can point to a number of special factors that could poison the market\u2019s performance this month. (1) The United Auto Workers are striking against General Motors<fbs-ticker data-name=\"GM\" data-href=\"https:\/\/www.forbes.com\/companies\/general-motors\" data-type=\"stock\"><br \/>\n  GM<br \/>\n <\/fbs-ticker>, Ford and Stellantis. (2) A government shutdown looks likely. (3) Interest payments on student loans resume in October.<\/p>\n<p>Then, too, interest rates are fairly high, and the Fed thinks it may ratchet them up one more notch this year.<\/p>\n<p>So will this October be poor? No one knows, but I hear my mentor David Dreman\u2019s words ringing in my ear: \u201cBet on the base case, not the rate case.\u201d By that he meant that the general pattern (the base case) often holds, despite special circumstances (the rate case).<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Historical Patterns<\/h2>\n<p>Ned Davis Research annually produces a \u201cCycle Composite,\u201d which is an equal-weighted melding of three separate cycles, the one-year cycle, the four-year Presidential Cycle, and the 10-year cycle. This year, the model suggests a fourth-quarter rally, accelerating toward the end of the year.<\/p>\n<p>Also, the firm notes that the vast majority of the stock market\u2019s gains occur in November through April.<\/p>\n<p>A $10,000 investment made in 1950 in the Standard &amp; Poor\u2019s 500 Index would have appreciated only to $14,590 by year-end 2022 if invested only in May through October. But if invested from November through April, it would have appreciated to $928,356.<\/p>\n<p>This seems to bear out the old saw, \u201cSell in May and go away.\u201d But this seasonality phenomenon has weakened in recent years.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Suggested Stocks<\/h2>\n<p>If you want to add to your stock-market exposure during October, or to replace some of your current holdings, here are a few stocks to consider. These stocks have not participated in this year\u2019s market advance, but I think they are good bets for a comeback in the fourth quarter and in 2024.<\/p>\n<p><strong>W.R. Berkley<\/strong> (WRB), based in Greenwich, Connecticut, writes several types of commercial casualty insurance. It has been profitable 21 years in a row, and posted a 19% return on stockholders\u2019 equity in the past four quarters. The stock sells for 14 times earnings.<\/p>\n<p><strong>Alliance Bernstein Holding LP <\/strong>(AB) is an investment management company with a good reputation. It\u2019s known as a value shop, and value has lagged behind growth as an investment style in recent years. As a value investor myself, I\u2019m prejudiced, but I think this stock is a bargain at 14 times earnings.<\/p>\n<p><strong>Titan International<\/strong><fbs-ticker data-name=\"TWI\" data-href=\"https:\/\/www.forbes.com\/companies\/titan-international\" data-type=\"stock\"><br \/>\n  TWI<br \/>\n <\/fbs-ticker> makes wheels, tires and undercarriage systems for tractors, earth movers and other off-road vehicles. A small-cap stock, it\u2019s barely covered on Wall Street. The earnings history is spotty, but good lately. The stock is cheap at five times earnings.<\/p>\n<p><em>Disclosure: I have no positions in the stocks discussed in today\u2019s column, personally or for clients. <\/em><\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/johndorfman\/2023\/09\/25\/alliance-berkley-october-special-month-in-the-stock-market\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We are coming up on a seasonal turning point in the stock market. October is special for three reasons: It is the month when history\u2019s most spectacular market crashes have occurred, most famously in 1929 and 1987. Yet it is actually, on average, a pretty good month. Based on historical price patterns, stocks are likely<\/p>\n","protected":false},"author":1,"featured_media":21986,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[],"class_list":{"0":"post-21985","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why October Is A Special Month In The Stock Market | Micro Loan Nexus<\/title>\n<meta name=\"description\" content=\"We are coming up on a seasonal turning point in the stock market. 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