Here Comes October on Wall Street!
September 29, 2026
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain
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October has long carried an ominous reputation on Wall Street. Often referred to as the “October Effect,” the belief that stocks are particularly vulnerable during this month is rooted more in historical events and investor psychology than in a reliable statistical pattern. Nevertheless, history offers some unforgettable reminders. According to the Federal Reserve’s historical records, the Panic of 1907 intensified in October, while the devastating market collapse of 1929 included Black Thursday (October 24), Black Monday (October 28), and Black Tuesday (October 29). Then came October 19, 1987, when the Dow Jones Industrial Average plunged an astonishing 22.6% in a single trading session. Yet October has also delivered substantial market gains, demonstrating that its reputation as a dangerous month is hardly a dependable investment indicator.
For me, Black Monday in 1987 is more than a historical footnote. At the time, I was working as a stockbroker at Kidder Peabody & Company, and part of my responsibilities included reporting daily market activity for a local radio station. Experiencing the chaos firsthand, and then having to explain it to the public, left an indelible impression. It was more than numbers on a ticker. It was fear, uncertainty, and adrenaline all rolled together. That experience reinforced something I have never forgotten: markets are driven by economic fundamentals, but human emotion can dramatically influence how investors respond to them. According to the Federal Reserve’s examination of the 1987 crash, automated portfolio-insurance strategies and structural weaknesses in financial markets helped accelerate the selling that day. In other words, fear was certainly a factor, but the mechanics of the market itself contributed to the extraordinary decline.
This October brings another interesting consideration: the 2026 midterm elections. Historically, midterm election years have presented their own challenges for investors. According to Fidelity Investments, the second year of a presidential term has produced the lowest average stock market returns of the four-year election cycle since 1950. However, the historical pattern becomes more encouraging following the elections. Research from the Schwab Center for Financial Research found that, across 13 midterm elections between 1974 and 2022, the S&P 500 averaged a 5.7% gain during the three months following Election Day and a 12.4% gain over the subsequent six months. All 13 periods produced positive six-month returns. Nevertheless, these historical averages are not guarantees of future performance, and the relatively small sample should discourage investors from treating the pattern as a dependable trading strategy.
Ultimately, October’s reputation and the uncertainty surrounding midterm elections offer a similar lesson. Markets may react to uncertainty surrounding taxes, regulation, and government spending, but corporate earnings, interest rates, inflation, and economic growth remain fundamental considerations. According to Fidelity, economic fundamentals have historically played a more important role in long-term market performance than election outcomes. Having witnessed one of Wall Street’s most extraordinary days firsthand, I have learned that maintaining perspective is essential. History deserves our attention, but it should never become a substitute for sound judgment. The calendar may tell us it is October, and the political headlines may remind us that an election is approaching, but neither should dictate an investment strategy.
The Takeaway: October’s turbulent history and the uncertainty of midterm elections remind us that disciplined investing requires perspective, preparation, and the ability to separate market fundamentals from emotion.
Please keep in mind this information should not be considered as financial advice. Investment decisions should be based on individual research and consultation with a qualified financial professional. The value of investments can fluctuate, and past performance is not indicative of future results. Always consider your risk tolerance and financial goals before making investment decisions.
