October's stock market history
Bottom Line: We're riding into October with the S&P 500 up 9% for the year already and with stocks having just wrapped up their best quarter for performance since 2013 & stocks near record highs. Not bad for a quarter that’s seasonally the worst and that includes the worst month for stocks historically – September. It speaks to why pragmatism rather than noise matters most. For example, “if you sold and May and went away”, you’d have made a big mistake this year especially. Importantly, the gains have been justified by the best economy in a generation, and record earnings driven by the booming economy and the benefit of the Tax Cut and Jobs Act.
October has a somewhat notorious reputation due to a couple of its notable high-profile days, but it's actually been a generally positive month for stocks. Since 1950, October has been the 7th best month of the year for stocks.
October is higher 62% of the time and the average outcome is a gain of about .8% (9.6% annualized). Not too shabby. Many have been waiting for the wheels to come off of this record-setting rally but that clearly has continued to be a losing proposition and on a fundamental basis, stocks aren’t any more expensive today than a year ago because of the improved economy.
With economic growth pacing north of 3% for the year and earnings season around the quarter – there's still room for optimism throughout the economy and the market. Whatever happens or doesn't happen this month shouldn't be based on the hyped stories about the sky falling because October is home to the crashes of 1929, 1987 and 2008. Most importantly never let your money & emotions cross paths. That's when mistakes happen.