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By Dr. David Edward Marcinko MBA MEd
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Stock market crashes have long been associated with the fall season, particularly October, which has earned a reputation as a month of financial turmoil. While crashes can occur at any time, the clustering of several historic downturns in autumn has led many investors to believe that markets are more vulnerable during this period.
Historical Patterns of Fall Crashes
Some of the most devastating collapses in financial history have taken place in the fall. The Wall Street Crash of 1929 began in late October and marked the start of the Great Depression. In October 1987, markets experienced “Black Monday,” when the Dow Jones Industrial Average plunged more than 20% in a single day. More recently, the global financial crisis of 2008 saw some of its steepest declines in September and October. These events have cemented autumn’s reputation as a season of heightened risk.
Why the Fall Is Riskier
Several factors contribute to the perception that fall is a dangerous time for markets:
- Investor psychology: The memory of past crashes in October can heighten anxiety, making traders more prone to panic selling.
- Fiscal cycles: Many institutional investors close their books at the end of September, leading to portfolio adjustments and sell-offs in October.
- Economic data releases: Key reports on employment, corporate earnings, and government budgets often arrive in the fall, influencing sentiment.
- Global events: Political and economic developments frequently coincide with autumn months, adding uncertainty.
Statistical Evidence and Skepticism
Despite the historical examples, statistical studies suggest that crashes are not inherently more likely in October than in other months. Market downturns are rare events, and their clustering in autumn may be more coincidence than causation. Crashes have also occurred outside the fall, such as the bursting of the dot-com bubble in spring 2000 and the COVID-19 crash in March 2020. This suggests that the so-called “October Effect” may be more psychological than empirical.
Lessons for Investors
Whether or not fall crashes are statistically more likely, the historical record offers important lessons:
- Diversify investments to reduce vulnerability to sudden downturns.
- Avoid panic selling, since many crashes are followed by rapid recoveries.
- Prepare for volatility, as autumn often brings heightened uncertainty.
Conclusion
Stock market crashes are not guaranteed to happen in the fall, but history has made October synonymous with financial turmoil. The clustering of major downturns during this season has created a psychological bias that influences investor behavior. Whether coincidence or pattern, the lesson is clear: autumn is a time when vigilance, discipline, and preparation are especially important for market participants.
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SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com -OR- http://www.MarcinkoAssociates.com
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Filed under: "Ask-an-Advisor", business, finance, Financial Planning, Funding Basics, Glossary Terms, Portfolio Management | Tagged: black monday, david marcinko, december, finance, Investing, November, october, personal-finance, stock market, stock market crashes, stocks | 1 Comment »
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