ECM round-up: Myth of the month
Many investors fear October because it is associated with a number of market crashes. But according to research from ADVFN, a pan-European equity markets website, it is actually quite a good month for equities.
“The Dow Jones crash of October 1929, Black Monday in 1987 and the Asian currency crisis in October 1997 are just some of the economic events that have demonized the month of October,” says Clem Chambers, CEO of ADVFN. “However, these crashes are generally considered to be pure coincidence, with October frequently turning in a strong performance following the often quieter summer months. While over-analysing can be an easy mistake to make, historical figures show that the FTSE 100 rallies from October to Christmas.”
According to ADVFN, analysis of the FTSE 100 over the past 21 years shows that September, not October, is statistically the worst-performing month. In September, on average, the FTSE 100 dips by 1.57%.
October’s average monthly return is dragged down by such incidents as Black Monday. When this one-off is excluded, October actually emerges as the fourth-best-performing month over the 21 years, returning a 1% profit. Only December, April and November perform better.