Published On: Wed, Oct 4th, 2017

Preparing for the Stock Market’s Most Volatile Month – October

There’s an art to choosing the right stocks, and there’s an art to selling stocks at the right time. There are many ways to do this, which includes finding penny stocks pre-spike, but even the most sure-fire methods can backfire. That’s what makes the stock market so thrilling and nerve-wracking at the same time.

photo/ См. ниже via wikimedia commons

It’s especially volatile during the month of October, which can turn even the most seasoned pro into an anxious mess. But, why is October such a bad month for stocks, and is there anything you can do to ride out the storm?

1. Why October Is Such a Bad Month

As is the case with most things in the stock market, it’s extremely difficult to come up with a set-in-stone answer to why October seems to be such a bad month. There are a few guesses:

  • After Labor Day, many analysts and traders return to the office to make major trades, creating an uptick in volatility.
  • The US Government fiscal year begins on October 1, creating a mild panic.
  • The Chairman of the Federal Reserve is named in October after their term ends every four years in January.
  • Companies report their third quarter returns, which reflects the summer season.

Whatever the reason, there’s no denying that October tops the monthly volatility rankings.

2. Don’t Panic

So, what can you do if October progresses and volatility seems to be the key feature of your portfolio for the month? It’s best not to panic.

While it’s true that October is historically extremely volatile, it ends up performing no worse than average by the time the month is ready to wrap up. As a matter of fact, it falls in seventh place, according to the Dow. It’s even third place in monthly performance with an average gain of 1.84 percent.

Try not to worry too much if your stocks seem to jump all over the place. Chances are, it won’t end up being as bad as you think.

3. Bull Markets Are More Likely to Occur in October

Another fact to boost your investing spirits is the fact that bull markets are historically more likely to occur in October. So much so, in fact, that October has a reputation for being a “bear killer.” That means October is more likely than any other month to create optimism and investor confidence, killing the pessimism that’s common in a bear market.

Out of the 35 documented bull markets that have occurred throughout the last century, 8 of them began in October. If you’re going by averages, only 3 should have occurred during each month. So, although October is volatile, if you ride the waves, it could turn out to be a strong month after all.

Don’t let October get you down. Knowing that you may experience some volatility, but that you’ll come out of it just fine in the end, is enough to boost anyone’s spirits. Maybe that’s the reason why October is known as the “bear killer”!

Author: Carmelo Hannity

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