Friendly Reminder: October Is Just a Month

With September in the books and global stocks clocking a 3.2% return, we have officially made it through the supposedly worst month for stocks without a crash.^[i] You might think this would be cause for great huzzahs, but alas, we still live in a world with pockets of investor skepticism. So now, with the calendar turning to October, the conversation turns to October’s reputation as the “month of crashes.” This is no more valid than September’s worst-month reputation or any other seasonal myth.

When you look at the averages, there is no apparent reason for October to have its grim reputation. The MSCI World has logged 55 Octobers since data start on 12/31/1969. Their average return is 0.9%, with a 58.2% frequency of gains.^[ii] This puts October’s average return mid-pack, the seventh best of all 12. February, May, June and August are lower and still positive, but they aren’t synonymous with “crash.” America’s S&P 500 echoes this, averaging just under 1% monthly gains in Octobers since 1926 and rising in 61% 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 -17.0% in October 1987 and -18.9% in October 2008.^[iv] Two huge ouches.

Those crashes loom large enough to color society’s perceptions of October. But the month itself was incidental. These events happened in October, not because of October. Plenty of other sharp, painful setbacks happened outside October. March 2020, for instance, fell -13.2% as COVID lockdowns wreaked havoc.^[v] In 2011, global stocks fell -8.6% in September as the eurozone debt crisis hit a crescendo.^[vi] The next month, October, they rallied. Similarly, in the 2000 – 2002 bear market, September 2002 fell -11.0%, while the new bull market began in early October.^[vii] Back further, in 1998, the market freakout over hedge fund Long-Term Capital Management’s collapse included a -13.4% plunge that August … and the V-shaped recovery brought a 9.0% October rally.^[viii] Same song, third verse, for 1990’s short bear market: big drops that August and September, followed by an October boom.

And that is only full month returns! Sometimes you get big crashes so short they don’t register in the monthly read. We have already lived that this year: Global stocks returned 0.9% in April.^[ix] Even though they fell -11.3% from April 2 – April 8, a drop spanning just four trading days. That seems rather like a crash. And it was very much not in October.

Now, maybe October 2025 will be painful. Short-term volatility is impossible to predict. 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, it isn’t because of the month, season, lunar sign, World Series matchup or what have you. 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.