That’s a great question right now as many folks still remain quite nervous. The Volatility Index ($VIX), for example, gained more than 10% today, despite a minimal decline in the S&P 500. It’s a signal that the stock market likely won’t handle bad news very well. Next week, we have the September nonfarm payrolls. And earnings season is set to kick off in just a couple weeks, when the banks begin reporting. Could we see an earnings warning or layoffs from a big name or two? We don’t know, but if we do see bad news, it’s quite possible we see another leg lower in October.
But could it crash?
Well, first we’d have to define “crash.” Over the past 74 years, the S&P 500 has seen a drop of 9% or more in a calendar month just 17 times. That’s 1 monthly drop of 9% or more every 4 years or so. If you’re looking for the start of a 20% to 30% drop, or even more, I’d say the chance of that is extremely slim, probably negligible.
Let’s take a look at the 2 worst October declines in U.S. history. First, there was October 1929 – The Great Depression:
October 1929 began the largest decline in U.S. stock market history. The decline didn’t find a bottom until nearly 90% of the stock market’s value was lost.
The other October decline that gives the month its bad name was October 1987 crash. Remember Black Monday? If you weren’t investing back then, this is what the chart looked like:
The 1987 “crash” happened over the course of a few weeks, not a few years like in 1929. There have been other rough Octobers, but they simply haven’t been as catastrophic as the 1929 and 1987 versions. In fact, earlier I mentioned that we’ve seen calendar month declines of 9% or more 17 different times since 1950. October has played a role in many of these. Furthermore, there have been 14 bear market declines (losses of 20% or greater from all-time highs) since 1950 and October has played a very interesting role in those too.
So what might we expect in October 2024?
If you’re interested in stock market history, then EarningsBeats.com is the right place to get your information. It’s interesting that the “Go Away” month (May, according to the Wall Street “experts”) has never had one of those 9% or more calendar month losses. May also has never started a bear market, yet the bottom of one was found in May. You can’t trust the historical information that you get from the media, but I can promise you that the information that we provide at EarningsBeats.com is 100% factual and ZERO percent false or misleading. As a practicing CPA for two decades, I can analyze and report data.
Tomorrow morning, on Saturday, September 28th at 10:00am ET, I’ll be hosting a FREE event, “History of Market Bottoms.” I want all of you to understand history the way we do at EarningsBeats.com. This event does require registration. To get more information and to save your seat, REGISTER NOW! If you’re reading this article and it’s beyond Saturday 10:00am ET, no worries. Anyone who registers (even late) will receive a recording of the event. Finally, we’ve developed an ebook, “74 Years of Market Bottoms”, that will be sent to you immediately upon registration, so don’t delay!
I’ll see you Saturday morning!
Tom