Loading ...I’m Convinced
I recently posted a piece about the likelihood of an October stock market crash. I am not going to repeat the points included then. Something just came to me that adds to my level of confidence that it will happen. So far this year, when the stock market was down sharply in the last month of each of the first two calendar quarters, stocks rallied sharply.(Both March & June) We are two weeks away from the end of the third quarter and unless the market has a sharp rally during those two weeks(I don’t think it will) people are going to freak when they see their 401K and brokerage statements for the end of quarter three and the YTD figures. If October has a few early days of weakness, everyone is going to sell, including professional money managers who will need to salvage whatever they can for their years performance. The level of capitulation is what crashes are all about. If the lows for the year are taken out in these next two weeks it is likely to get ugly in October.
Yes, October is a risky month for the stock market. The other risky months are September, October, November, December, January, February, etc.
If I’m not mistaken, I think this was a quote by Mark Twain many years ago.
But seriously, I am thinking that you will be proven correct on this prediction. Estimates for Q3 earnings for many companies are currently inflated and don’t reflect reality.
With rising interests rates, it will be more difficult to play games with earnings via stock buybacks. Some companies have already started to reduce their Q3 earnings estimates.
And this trend is not going to end anytime soon.
Here is what Mark Twain actually stated:
“October: This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, January, September, April, November, May, March, June, December, August and February.”
– Mark Twain