- October has historically been the stock market's most dangerous month, with major crashes occurring in 1929, 1987, 2008, and 1997.
- Despite these dangers, since 1928, stocks have risen an average of 0.6% in October, and October 2022 was one of the best months in history.
- Current market conditions include high valuations, mid-term elections, and an energy supply shock, prompting a defensive playbook.
- Investors are advised to shift capital into defensive holdings like WM (waste management) and Realty Income (REIT) for durable cash flows and dividends.
- Historically, the stock market has always managed to thrive over time, with every single one of the S&P 500's rolling 20-year periods ending in positive total returns.
- While it's certain that another downturn will eventually arrive, no one can say exactly when, suggesting that staying in the market is the more lucrative option.
As stock market volatility looms, nearly 50% of investors anticipate falling prices, prompting a defensive shift among savvy investors. Historical data shows October's volatility, with significant declines in past decades, leading experts to recommend stable investments like WM and Realty Income for protection against downturns.123489
The S&P 500 has surged by more than 21% over the past six months, while the tech-focused Nasdaq Composite has risen nearly 30%. However, strategists at Deutsche Bank warned of a "near 100%" chance of a recession within the next year, emphasizing that a soft landing would be "historically unprecedented."
October has a notorious reputation for market crashes, with five of the S&P 500's 10 biggest single-day declines occurring in this month. The Black Monday crash in 1987 and the market's plunge in October 1929 are notable examples. Since 1928, stocks have risen by an average of 0.6% in October, but the VIX, a measure of market volatility, has historically spiked during this month.56
Experts suggest that rather than waiting for the perfect moment to buy or sell, staying invested is often the more lucrative option. WM and Realty Income are highlighted as defensive investments, with WM's stock price down over 15% from its 52-week high and Realty Income offering a nearly 6% dividend yield. Both companies provide stable cash flows, making them attractive during uncertain times.
Investors are advised to consider these defensive strategies as they navigate the potential risks of the upcoming months.
“Nearly 50% of investors expect stock prices to fall in the next six months, per the latest AAII survey. Yet since 1928, October has averaged a 0.6% gain, and October 2022 saw the Dow rally 12% during a bear market.”
Yahoo Finance
