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Why Is October Known for Volatility?It’s the month the Soviet Union launched Sputnik 1 into orbit (1957) and Al Capone was jailed for tax evasion (1933). It’s the birth month of our 39th president, Jimmy Carter (1924), and baseball great Mickey Mantle (1931).1 It’s also the month that Wall Street has long associated with stock market volatility.
Why has this month been so volatile historically for stock prices? Some observers believe that corporations have more information at the start of the fourth quarter and may revise earnings estimates, which can influence stock prices and the behavior of institutional investors. Less important than the possible causes is how you react. Timing market cycles is something that even skilled professionals find troublesome and risky. As another October approaches, the most prudent approach may be to focus on your long-term goals.
1, 3) Encarta.com © 2002 Emerald Publications
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October’s
reputation is well earned. In the past 15 years, five out of the top 10 biggest single-day gains in the Dow Jones Industrial Average, including the top two,
occurred during October. Four out of the five largest single-day drops in the
Dow, including the stock market crash of 1987, also occurred in October.
(September 17, 2001, the first day of trading after 9/11, was fourth in the top
five.)2 Of course, the stock market crash that
ushered in the Great Depression was in October 1929.3
