Jeff Hirsch: October is a Bear Killer
- Joshua M Brown
- October 1st, 2011
My friend Jeff Hirsch is the author of the book Super Boom which lays out his Dow-38,000-by-2025 thesis. He is also the son of Yale Hirsch and the keeper of the flame for the excellent Stock Trader’s Almanac brand. He’s also a smart cookie and a funny guy to boot. Anyway, I was thrilled to open my Barron’s app this morning to find Jeff’s commentary on markets in October…
“We’ve seen a lot of bear markets hit bottom and turn in October,” says Jeff Hirsch, editor in chief of Wiley’s Stock Trader’s Almanac, whose latest edition is due out Oct. 11. “We call it a bear killer.” Hirsch notes that 11 postwar bear markets on the Dow Jones Industrial Average have reversed in October. (The Standard & Poor’s 500 and the Nasdaq usually moved in lockstep with the Dow during these periods.)
Take Stock: Though some have “Octoberphobia,” the month can be a positive turning point for equities.
As of Thursday, the Dow wasn’t officially in a bear market, at least as measured by many market researchers, even though it closed about 13% below its April 29 high. However, for investors who have seen their stocks steadily decline, it certainly feels like one. But the pain could be ending.
True, some Octobers, like 1929′s and 1987′s, have been extremely cruel. But Hirsch says that, going back to 1950, September has had a greater average loss.
In fact, October ends the stretch between what the Stock Trader’s Almanac calls the market’s worst six months (May through October) and its best six months (November through April). Yes, Hirsch says, “Octoberphobia can be self-fulfilling.” But if investors don’t brood too much, maybe that hobgoblin will stay away.
So does the market hit bottom in October and make its typical end-run into the end of the year from there? Its possible, but I personally associate October with some of the worst markets I’ve ever seen in my 13 years on The Street.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.