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The Ominous October, the stockmarket connection

October maybe just another month in the Gregorian calendar. October is the festival month in India.  The month of Dussehra, Durga Puja, Idd, Diwali. But for the investors and stockmarket participants, it seems to be a particularly inauspicious month. If the investors had their way, they will skip this one month in the calendar. Not unlike, some hospitals which do not have the 13th floor or some hotels numbering room # 13.

 

There is a strong historical connection to October and the stock-market crashes, particularly Wall Street. The third week of October is particularly, ominous it appears. A look at the dates and events presented below would befuddle the most rational persons.

 

 

  • October 17, 1907 :- The Panic of 1907 began. In this financial crisis the New York Stock Exchange fell close to 50 % from its peak the previous year. There were runs on numerous banks and trusts. This crisis led to the downfall of the Knickerbocker Trust Company – New York City’s third largest trust.
  • October 24, 1929 – Black Thursday. The Great Crash of 1929. October 28 and October 29 were worse, leading to widespread panic and the onset of unprecedented consequences for the US. The collapse continued for a month. This led to the Great Depression.
  • October 19, 1987- Black Monday. On this day, the Dow Jones fell 22.6 % and the S&P-500 , 20.4%. Between Oct 14 -19, the market lost 31 percent. The recovery from this crash was relatively quick.
  • October 27, 1997 – Mini-crash caused by the economic crisis in Asia,a.k.a, Asian Flu. On this day, the points lost by Dow Jones still ranks as the sixth in its 112 year existence. The crash halted trading in the NYSE for the first-time ever.
  • October 24, 2008 – Black Friday. The BSE Sensex crashed 1070 points, 10.6 %. This is on top of several Black Mondays, Tuesdays, Wednesdays and Thursdays. A crash of 2400 points in the 3rd week of October

  

In October, BSE Sensex has already lost 4300 points, from 13,055 to 8701, a fall of 32 %.  The story is the same in markets world over.

 

Wall Street Journal has aptly put a headline “ For stocks, October can’t end soon enough”.

 

 

 

Posted in Anti-matter.


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