Halloween isn’t the only spooky event in October!

October is challenging investors.

October has almost always been challenging investors. Just take a look at the chart below. Since 1950, October has delivered more 1% market swings (up or down) than any other month. This year is proving to be no exception.

Concerns about rising bond yields, stock market valuations, tariffs, and the possibility of the Federal Reserve normalizing monetary policy too quickly have unnerved Wall Street this past week, and those anxieties have pushed some investors to sell rather than hang on to quality shares. That reaction may be unwarranted.

The recent volatility may seem especially alarming because things have been so placid for so long. When the S&P 500 lost 0.87% on October 5, it snapped a streak of 51 trading sessions without a move of 0.8% or more. The last time a streak like that occurred was in 1968. Even after the Q1 correction, calm has been common in the market this past few months.

This month’s events remind us that Wall Street is a volatile place. Investing is for the long term. If you sell your shares during the downturns and simply walk away, you miss buying opportunities and leave yourself on the sidelines when the market stages a comeback. As an example, the Dow lost 13% in October 2008 and fell to 6,594.44 in March 2009. Just four months later, it was above 9,000; just four years later, it was at a record peak. The investors who gave up on stocks missed out on the longest bull market in history.

Speaking of historic, the Dow closed at a record peak less than two weeks ago, at 26,828.39 on October 3. That represented another comeback, for the blue chips set a record in late January, then fell 4% in a week back in February and corrected.

Wall Street is periodically challenged by shifts in monetary policy, geopolitical events, and data. Recognize them for what they are: relative abnormalities in the long history of the market. If you have questions or concerns about these recent events, please reach out to us.