The October effect is a theory that stocks tend to decline during the month of October.
 | | October Effect | The October effect is a perceived market anomaly that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological expectation rather than an actual phenomenon as most statistics go against the theory. Some investors may be nervous during October because the dates of some large historical market crashes occurred during this month.
The events that have given October the reputation for stock losses have happened over decades, but they include the Panic of 1907, Black Tuesday (1929), Black Thursday (1929) Black Monday (1929) and Black Monday (1987). Black Monday, the great crash of 1987 that occurred on October 19 and saw the Dow plummet 22.6% in a single day, is arguably the worst single day. The other black days, of course, were part of the process that lead to the Great Depression - an economic disaster that stood unrivaled until the mortgage meltdown nearly took out the whole global economy with it. | | Read More » | | Related to "October Effect" | | | | Trading Psychology | | Trading psychology refers to the emotions and mental state that help to dictate success or failure in trading securities. | | Read More » | | | Panic Selling | | Panic selling refers to the sudden, wide-scale selling of a security or securities by a large number of investors, causing a sharp decline in price. | | Read More » | | | Black Monday | | Black Monday, Oct. 19, 1987, was a day when the Dow Jones Industrial Average fell by 22% and marked the start of a global stock market decline. | | Read More » | | | Subprime Meltdown | | The subprime meltdown includes the economic and market fallout following the housing boom and bust in 2007 to 2009. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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