Although historically, many bad things have happened in stock markets around the world in the month of October, the dreaded 'October Effect' is more perception than phenomenon, experts say.
> October has a reputation of being one of the scariest months for investors. Some of the biggest stock market crashes in history happened in this month.
Experts argue that the so-called “October Effect” has more to do with psychological expectations than an actual phenomenon.
> The Panic of 1907 was a US financial crisis that began in mid-October when the New York Stock Exchange slumped 50% from its peak just a year earlier. One of the largest trust companies in the country was suspended, triggering nationwide fears and massive cash withdrawals from New York City banks.
> The Great Crash, or the Stock Market Crash of 1929, began on Oct 24 (Black Thursday) – the first day of panic selling that devastated the market. It signalled the beginning of the 12-year Great Depression.
> Black Monday refers to Oct 19, 1987, when stock markets around the world plunged in a sudden financial meltdown.
It started in Hong Kong before spreading westward, hitting bourses like dominoes.
The US Dow Jones Industrial Average suffered its biggest percentage loss (22%) in history that day.
> The Asian economic crisis erupted in July 1997 and quickly raised fears of a global meltdown. On Oct 27, the Hang Seng Index in Hong Kong plunged 6%.
In the United States, the Dow fell 350 points to trigger a 30-minute halt in trading.
> The global financial crisis in 2008 is considered one of the worst since the Great Depression.
In began in 2007 with the US sub-prime mortgage crisis. Within a year, it became a full-blown global banking crisis. Markets around the world took a battering.
On Oct 6, the Dow dropped 800 points, closing below 10,000 for the first time since 2004.
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