Post Election Year October Stock Performance Since 1950

Post-election year Octobers historically rank mid-pack but average performance improves

The term Octoberphobia has been used to describe the phenomenon of major market drops occurring during the month of October. Market calamities can become a self-fulfilling prophecy, so keep this in mind as new all-time highs in September were historically followed by modestly softer performance in October when compared to all years.

October can evoke fear on Wall Street as memories are stirred of crashes in 1929, 1987, the 554-point DJIA drop on October 27, 1997, back-to-back massacres in 1978 and 1979, Friday the 13th in 1989 and the 733-point DJIA drop on October 15, 2008. During the week ending October 10, 2008, DJIA lost 1,874.19 points (18.2%), the worst weekly decline, in percentage terms, in our database going back to 1901. March 2020 now holds the dubious honor of producing the largest DJIA weekly point decline.

Post-election year Octobers are neither great nor bad since 1953, ranking mid-pack across DJIA, SP 500, NASDAQ and Russell 1000 with average gains ranging from 1.2% (DJIA) to 1.9% (NASDAQ). DJIA has the best historical odds for gains having advanced in 13 of the last 18 post-election year Octobers. Despite the best average gain, NASDAQ actually has the weakest record based upon frequency of advances, declining in 6 of the last 13 post-election year Octobers. A 12.8% gain in 2001 boosts its average. Should a meaningful decline materialize in October it is likely to be an excellent buying opportunity, especially for any depressed technology and small-cap shares.