Friendly Reminder: October Is Just a Month

With September in the books and global stocks clocking a 3.6% return, we have officially made it through what investing lore suggests is the worst month for stocks without a crash.^[i] Yet instead of widespread huzzahs, we observed pockets of investor scepticism. So now, with the calendar turning to October, commentators we follow have turned the conversation to October’s reputation as the month of crashes. History shows this is no more valid than September’s worst-month reputation or any other seasonal myth.

Looking at average returns, we see no apparent reason for October to have its grim reputation. The MSCI World has logged 55 Octobers since data start on 31/12/1969. Their average return is 0.8%, with a 63.6% frequency of gains.^[ii] This puts October’s average return low- to mid-pack, the eighth best of all 12. May, June and August are lower and still positive, but we haven’t seen them associated with crashes. The UK’s FTSE All Share Index roughly resembles this, averaging 0.6% monthly gains in Octobers since 1924 and rising in 61.4% of them.^[iii]

But October, in addition to Halloween (spooky), has two really bad crashes during the MSCI World Index’s history: 1987 and 2008. Black Monday and one of the worst months in 2008’s global financial crisis. Global stocks plunged -21.7% in October 1987 and -10.6% in October 2008.^[iv] Two huge ouches.

In our view, those crashes loom large enough to colour society’s perceptions of October. But the month itself was incidental. These events happened in October, not because of October, in our view. Plenty of other sharp, painful setbacks happened outside October. In March 2020, for instance, global stocks fell -10.6% as COVID lockdowns wreaked havoc.^[v] In 2011, global stocks fell -4.5% in September as the eurozone debt crisis hit a crescendo.^[vi] The next month, October, they rallied.^[vii] Similarly, in the 2000 – 2003 bear market, September 2002 fell -12.5%, but markets rebounded in October before widespread uncertainty around the Iraq War knocked stocks anew.^[viii] Back further, in 1998, the market freakout over hedge fund Long-Term Capital Management’s collapse included a -15.3% plunge that August … and the V-shaped recovery brought a 10.6% October rally.^[ix]

And that is only full month returns! Sometimes stocks’ big crashes are so short they don’t much register in the monthly read. We have already lived that this year: Global stocks fell just -2.5% in April.^[x] Even though they fell -9.8% from 2 April – 8 April, a drop spanning just four trading days. To us, that seems rather like a crash. And it was very much not in October.

Now, maybe October 2025 will be painful. Based on our research, short-term volatility is impossible to predict. We find corrections—sharp, sentiment-induced drops of -10% to -20%—can happen any time, for any or no apparent reason. But if a pullback or worse strikes, we don’t think it is because of the month, season, lunar sign or what have you. In our view, it is just the market’s random noise, the collision of emotion and short-term trading.

Or, when in doubt, take it from that great sage, Samuel Clemens: “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” Yes, Mark Twain knew the score way back in 1893, writing Pudd’nhead Wilson. A timeless truth if ever there was.