October is known as the jinx month because of crashes in 1929, 1987, Friday the 13th in 1989 and the financial meltdown in 2008. Yet, according to the Stock Trader's Almanac, October is a "bear killer" and turned the tide in 11 post World War II bear markets.
The S&P 500 closed September 2011 down 7.2 percent, its worst monthly performance since May 2010 and worst September since 2008, when it fell 9.1 percent.
Is October a great time to buy stocks? In the past eleven years, the NASDAQ Composite has posted a gain of 2.2 percent, while the Dow and S&P 500 have averaged a return of 1.2 percent and 0.41 percent, respectively.
The table below highlights the in October compared to its returns in other months. Since 2000, it has been the index’s fifth best month.
Among the major S&P 500 sectors, technology has performed the best in the past eleven years, with an average gain of 4 percent in October.
Historic Performance in October
Dow since 1896:
- On average, the Dow has gained 0.14 percent during October
- Up 59 percent of the time in October, and Down 41 percent of the time
- The best October was in 2002, when it rose 10.8 percent
- The worst October was in 1987, when it fell -23.2 percent
- October ranks as the fourth worst month out of the year for the Dow
- On average, the Dow has declined -0.75 percent during October when September has been a negative month, up 56 percent of the time
S&P since 1928:
- On average, the S&P has gained 0.28 percent during October
- Up 59 percent of the time in October, and Down 41 percent of the time
- The best October was in 1974, when it rose 16.31 percent
- The worst October was in 1987, when it fell -21.76 percent
- October ranks as the fourth worst month out of the year for the S&P
- On average, the S&P has declined -0.83 percent during October when September has been a negative month, up 53 percent of the time
NASDAQ Composite since 1971:
- On average, the NASDAQ Composite has gained 0.34 percent during October
- Up 53 percent of the time in October, and Down 47 percent of the time
- The best October was in 1974, when it rose 17.17 percent
- The worst October was in 1987, when it fell -27.23 percent
- October ranks as the fifth worst month out of the year for the NASDAQ
- On average, the NASDAQ has declined -0.73 percent during October when September has been a negative month, up 56 percent of the time
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