By Ryan Casey Stephens, FPQP®
Special Contributor
Happy Halloween reader! Would you like to hear a few ghostly tales? There are unexplained things in this world. Sometimes events occur that are so peculiar they might be best described as … unnatural.
Turn off the lights, turn on the flashlight, and let’s shudder through this week’s Three Things to Know.
The Cursed Month
There is a month that, to the untrained eye, appears to be much like any other. Upon closer inspection, however, something truly mysterious is going on with the month of October. You see guys, gals, and ghouls, in dark corners of Wall Street, this month is fabled.
The October Effect, as it is called, refers to the strange events that have occurred in this legendary month. Seven of the worst stock market crashes have taken place within this 31-day span on the modern calendar. Is this all just superstition? You decide. But take note, the S&P 500 did fall to the lowest level of this year on, of all days, October 13, 2022.
The Old Ball Game
The World Series of America’s beloved pastime is in full swing, and our own state’s Astros are attempting to topple the Phillies. Against any other opponent, the series might be as exciting, but the stakes are high and the Astros might be our only hope. Lean in, as the horror of this tale approaches.
The Phillies’ three previous wins all occurred in or near major market catastrophes.
Their first series win in 1929, in the month of October of course, coincided with the bloody crash on Wall Street that ended the Roaring ’20s.
In 1980 they defeated the Royals to win just one month before the bear market of 1980. What was behind that market decline? The Fed was raising the rate to battle skyrocketing inflation.
They last triumphed in 2008, and I don’t suppose I need to explain that one to the reader.
Sell Your Candy And Buy Stocks
Have you ever heard of the Halloween Strategy? There’s an old belief that after handing out treats to the kiddies, you should head inside and buy an entire portfolio worth of stock to hold until May. You then sell that stock before the summer, only to purchase again at Halloween. It’s believed this practice originated in England when wealthy estate owners would leave London to summer in the country, then return in Autumn.
Does it work? From 1970 – 2017 you’d have done 5.05 percent better using this spooky tactic than the opposite – buying in May and selling in October. No one’s been able to explain why this eerie timing performs statistically better, either.
Ryan Casey Stephens FPQP® is a mortgage banker with Watermark Capital. You can reach him at [email protected].
