The “October Effect”
October 7, 2025
Entrepreneur & Author
“Stock market trends?”
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Last week, I discussed how stock markets tend to behave in a non-election year here in the United States. Yet, no real look at seasonal patterns would be complete without revisiting some of the more dramatic October moments in history—moments that remind investors just how fragile confidence can be when the calendar turns.
October has earned a reputation for being a treacherous month on Wall Street. This perception, often called the “October Effect,” suggests that stocks are more vulnerable to decline during this period. Economists will tell you it isn’t a proven statistical reality but rather a psychological hurdle. Still, when enough investors believe something, perception alone can move markets. That’s why October’s history of crashes lingers in the collective memory of traders and investors alike.
The most infamous reminder came on October 19, 1987—Black Monday. On that single day, the Dow Jones Industrial Average plunged over 22%. At the time, I was working as a stockbroker at Kidder Peabody & Company, and part of my duties included reporting daily market activity for a local radio station. Living through the chaos firsthand, and then having to communicate it to the public, left me with an indelible memory of just how quickly markets can unravel. It was more than numbers on a ticker—it was fear, uncertainty, and adrenaline all rolled together.
That experience underscored a lesson that still applies today: October may be more psychological than statistical, but the human factor in markets can never be discounted. When emotions run high, logic often takes a back seat, and that’s when volatility spikes. For investors, it serves as a reminder that awareness and preparation can make all the difference—especially in a month that has, time and again, proven itself to be a testing ground for resilience.
Courtesy of Investopedia, here are some of the largest historical crashes that happened during this month:
Black Tuesday (1929)
Black Thursday (1929)
Black Monday (1929)
Black Monday (1987)
Hope you enjoy this week’s issue.
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