October can be a spooky time for investors. It’s a month where the ghosts of market crashes past - think 1929, 1987 and 2008 - rear their ugly heads to haunt us once again. But the wild ride share markets have been on this year are taking the spooky Halloween vibes to a whole ‘nother level. 👻
According to financial author Michael Batnick, the S&P 500 has endured unlucky thirteen 52-week lows this year, more than in the entire last decade. Spooky. So far in 2022, the S&P 500 Vanguard ETF (VOO) has fallen 22%, but many companies have fallen much further. Shares in Meta (META) are down 62%, while Tinder parent Match Group (MTCH) has lost more than two thirds of their value. It’s a true Nightmare on Wall Street. 😱
Are market lows keeping Taylor Swift up at night? 😵 T-Swift’s new album Midnights dropped last week and is based on ‘stories of 13 sleepless nights scattered throughout my life’. It has double the number of swear words as her 2020 album Evermore, and was so popular that it smashed the record for most streamed album in a single day on Spotify (SPOT).
But investors and Swifties alike may be able to rest easy. Over long periods of time, historical data shows that the belief that share markets fall in October, aka ‘the October Effect’, has been unmasked like a hapless Scooby-Doo villain. The S&P 500 has historically increased by an average of 0.9% in October. And strangely, more bear markets have ended in October than any other month. 🐻 Maybe it’s just a matter of shaking off the current volatility first.