Predicting the Stock Market And The Fear of October

If you’re the type of person that reads financial news, you’ve probably seen some articles this week on why we need to be careful entering the worst month of the year for the stock market. The boogeyman is going to come and steal your 401k earnings this month because October is the worst!

There is some understandable fear of October, based on certain historical events. Many of the worst moments in the Great Depression happened in October, the stock market crash of 1929 came in October and even in 2008 the S&P lost almost 20% in October. People point to these events and say “There’s just something about that month!”

That argument doesn’t actually hold weight if you study statistics historically. Over the actual span of the market, there have been worse Septembers overall than Octobers. More than that, more bear markets have ended in October than have started in October. The statistics don't really hold up, yet there is this superstitious feel that not only creeps into questionable essays written for MarketWatch, but also in really respectable publications such as the Wall Street Journal.

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Let me tell you why predictive analysis is so dangerous… because who gives a rip what MarketWatch says?

Somebody is listening right now saying, “People don't do that. They don't actually try to time the market. They don’t seriously try to see what's going on and make decisions and predict what's going to happen.” I’m here to tell you, people do this all. the. time.

How do I know that? Because I talk with people everyday. That's my job! My job is not primarily to sit and yell into a microphone. My job is to sit down with people everyday and hear about their financial stories.

In the process of sitting down with hundreds of people, patterns and themes begin to emerge. One of those primary themes is that we do everything we can to have some sort of control over the future. We want to know by any means possible what the market might do next year, and the closer we get to retirement the more concerned we get.

We're reading everything we can and looking at every sign. This can deeply damaged our success.


I had a client come into my office recently…

The 2008 crash was now over a decade ago and a client came in and said, “Hey, I didn't play it right in 2008. I didn't see it coming. Since I didn't see it coming I pulled all my money out, but I was late and I lost a lot of money. Ever since then I've been so worried about getting back in the market that I’ve stayed out. I can't ever feel comfortable with what's coming next. I don't know when the right time is to finally get back in.

The problem is that there is no “right time”.

Whether you're asking “When should I get into the market?” or “When should I retire?” The market will not give you that answer. There is no “right time” to invest in the market. There is no “right time” when it's safe from a market perspective to retire.


There is no “right time” to invest in the market. There is no “right time” when it's safe from a market perspective to retire.


I can't tell you how many people call me on a regular basis and say, “Is now the time to pull back a little bit? Should we change the way we’re invested? I was watching XYZ and saw what could be coming in the market.”

Friends, that treadmill will kill your long-term success and I'm going to tell you why.

Why is predictive analysis so dangerous?

It’s dangerous because the unfortunate reaction to predicting is constant anxiety.

It's the desire for control. We want to do anything we can to have some sort of control over what's coming. We think “If I could just talk to that advisor, they could speak authoritatively about what the markets going to do next. It would bring so much peace.

Let me tell you this... predictive analysis is the opposite of where peace comes from. It’s wear anxiety and death live.

How can we avoid the market guessing game?

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You pick a risk you can handle up front before all the nonsense! What if we just circumvented all of this stress? What if we got past all the talk of “What could happen?”

Predicting the stock markets is literally no different than arguing about which sports team is going to win the championship this year. There are so many variables that go into what's going to happen. There is zero way that any of us can predict, with any level of accuracy, the future. That's been proven over and over again and yet we still do it.

We have to assume the worst.

When I work with people, we sit and think, “What is the worst case scenario? How much risk can you handle based on something bad happening in the market so that you can still get through it and your plan still works?”


Predicting the stock markets is literally no different than arguing about which sports team is going to win the championship this year. There are so many variables that go into what's going to happen.


Don’t base it on what could happen. You have to base it on “What can my plan handle regardless if the next five years are wonderful or terrible?”

When was the last time you looked at your 401k? When was the last time you looked at how you were invested and tried to measure the risk?

We do this with every person that comes in. We go through a process to tell them scientifically the risk they are taking.

If you’ve never done that, here's an easy way to get an idea:

  • Look at how many equities are in your portfolio.

  • How much stock do you have in your 401k? In your IRA?

  • The amount of stock you have is kind of like a pedometer in your car. If 80% of your portfolio is stocks, you're going fast. You're 80 miles an hour down the road. If 30% is in stocks, you’re in a school zone.  You're very cautious.

So many people I've met with have built a plan that says “If things are good we're okay, but if they go bad we're not.”

You don't plan for the future by looking at the signs of the times.

Predicting the future of what could happen is overwhelming and hardly ever accurate. What you need to do is build a plan that says I am ready regardless. That is how you wake up and have peace.

What if you were invested in such a way that you don't have to live with that worry anymore? Where you don't have to think “Boy if the market hits a correction what would happen to me?” That you can know you're invested in such a way your plan works regardless. That is the goal for feeling confident in your retirement.

All these articles this week about October being so terrible mean nothing. They will not give you an ounce of help in your portfolio. They’re speculative and most of them are not going to be accurate. If you act on those headlines, you live with anxiety. There's a different way.


If you don't have that peace, take a minute and set up a free consultation with to talk about your situation, your concerns and your fears. There is nothing more peaceful than getting off of that treadmill.