OPINION: As October approaches some professional investors are prone to letting superstition get the better of them.
Drawing on what they see as a rich history of precedent, they fear a crash.
Black Thursday on October 24, 1929 kicked off the Great Depression, Black Monday on October 19, 1987 signalled the start of the 80s bear market. The Asian Economic Crisis wreaked havoc with US stock markets on October 27, 1997. And while the bankruptcy of US investment bank Lehman Brothers on September 15, 2008 marked the start of the Global Financial Crisis, violent stock market swings through October of that year that did little to dispel the superstition.
However, despite these spectacular examples, the data does not support the fear. Indeed, if there is a month to stay away from markets it is September – it is the only month where average returns on the benchmark S&P500 over the last 50 years have been negative. Conversely October over the same period has delivered a positive return.