Over the next handful of days, you’re likely to hear about stock market patterns and the month of October. Here’s what you need to know.
“All of these pithy little observations and patterns are worthless,” insisted Mad Money host Jim Cramer. “They are inconclusive at best and downright misleading at worst. They are a total waste of time.”
“October’s not a dangerous month per se. It just happened to be dangerous in October of 1987, when the market crashed. I bring this up because in just a few days I am sure we will hear about how history could repeat itself.
2012 marks the 25th anniversary of the '87 crash.
(What happened in 1987) "is the real tenet behind this kind of patterned thinking –and some of you might actually sell stocks simply because we have an anniversary. I don’t want you to do that,” said Cramer.
Patterns are by nature, - backward looking. And they’re predictive until they aren’t – at which time they’re tossed aside.
“Every year there are events that occur that neutralize or render totally ineffective this kind of star and naval gazing,” Cramer said.
Following are some reasons why Cramer feels ‘patterned’ investing is a bad idea - not only this October but pretty much all the time.