October is the month of the large crashes on all the stock exchanges around the world. All of the largest crashes in history have occurred during this month.
Dow Jones fell 22.6 percent
The last big crash happened October 19, 1987 when the American Dow Jones index fell with 22.6 percent during a single day. Also in 1989 there was a mini-crash at the stock exchange during October.
The October phenomena is well known among the world’s stock brokers, but recently a stock broker claimed that an upswing in August statistically meant an upswing in September and October as well, according to CNBC.
This information didn’t seem right to Peter Warren, and he took a massive dive into the financial statistics, and he surfaced with the statement that the stock broker presents a questionable truth.
Data from 1928 until last year indicates that the stock markets in the US have increased in three of five cases from the middle of September to the end of October. The statistics indicate at the same time that the average yield in the period is negative, also in the years when August had an upswing.
According to Warren, the best yield in the period was 8.96 percent while the poorest was negative 24.24 percent.
“Simply stated, you loose much more the years with a downswing than you make the years with an upswing,” wrote Warren in his report.
33 percent chance of an upswing
The tendency is even blacker at Oslo Børs. The last 20 years, Norwegian stock have increased just one of three times in the period. The average yield was negative 3.4 percent. The best year was 10.6 percent while the poorest year was negative 27.5 percent.
There are many ways of reading this kind of statistics. The careful reader would say that the statistics are on your side and you should be careful, while most stock pushers would look at the best received yield, ignore the rest and publish a report with the headline “Chances of an 11 percent upswing!”, concluded Warren.