October, fear or fest?
September 27th, 2020
⏰ 1 minute read
⏰ 1 minute read
October returns, trend & prediction...
Black Mondays
October sends shivers into investors. The month is famously thought of as being a very negative time for the market. This is because of the ‘Black Mondays’ when the stock markets around the world crashed in both 1929 & 1987, predicting recession & depression. As we now head into October next week, here’s a look at the JCI’s October history.
30 Octobers
We have 30 October’s data back to 1990. We’ve looked at the percentage change of October compared to September in each of those years. Surprisingly it turns out that October is on average a positive month, with a small average return of plus +0.9%. But averages don’t tell the story, so here’s a look at how that average is created.
1990 to 2004
If we divide up the 30 years into two halves, then the first half is very simple. The average October performance for the years from 1990 to 2004 is plus +2.1%, similar to the average of all months. The average is evenly spread with one positive return year followed by a negative one, expect for one extra negative in 1995.
2004 to 2010
The second half is totally different. October 2004 is a very positive year, +14% in only one month. The years from 2004 to 2007 are all positive with a super average return of plus +6.7%. But the rate of return does declines steadily & by 2008 it has turned to negative although 2009 is back to a positive +2% again.
2010 to now
But 2009 was a fake & the years from 2010 until 2019 have been almost completely negative. In this last ten years, October has lived up to its fearful reputation with eight of the ten years having negative returns, only 2014 & 2018 were positive. The average since 2010, during which JCI returns have also been low, is minus -1.7%!
Rising
But it looks like the trend of October returns is improving as you can see from the trend line on the chart. Although 2019 was negative -3%, 2018 was positive plus +3.8%, so the average of the last 2 years is back to plus again. This is good news for this coming October 2020. We expect big gains this year.
October sends shivers into investors. The month is famously thought of as being a very negative time for the market. This is because of the ‘Black Mondays’ when the stock markets around the world crashed in both 1929 & 1987, predicting recession & depression. As we now head into October next week, here’s a look at the JCI’s October history.
30 Octobers
We have 30 October’s data back to 1990. We’ve looked at the percentage change of October compared to September in each of those years. Surprisingly it turns out that October is on average a positive month, with a small average return of plus +0.9%. But averages don’t tell the story, so here’s a look at how that average is created.
1990 to 2004
If we divide up the 30 years into two halves, then the first half is very simple. The average October performance for the years from 1990 to 2004 is plus +2.1%, similar to the average of all months. The average is evenly spread with one positive return year followed by a negative one, expect for one extra negative in 1995.
2004 to 2010
The second half is totally different. October 2004 is a very positive year, +14% in only one month. The years from 2004 to 2007 are all positive with a super average return of plus +6.7%. But the rate of return does declines steadily & by 2008 it has turned to negative although 2009 is back to a positive +2% again.
2010 to now
But 2009 was a fake & the years from 2010 until 2019 have been almost completely negative. In this last ten years, October has lived up to its fearful reputation with eight of the ten years having negative returns, only 2014 & 2018 were positive. The average since 2010, during which JCI returns have also been low, is minus -1.7%!
Rising
But it looks like the trend of October returns is improving as you can see from the trend line on the chart. Although 2019 was negative -3%, 2018 was positive plus +3.8%, so the average of the last 2 years is back to plus again. This is good news for this coming October 2020. We expect big gains this year.
Now you need to know which stocks to buy...⬇️
