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Why have major market crashes occurred in October (1929, 1987, 1997mini, 2008)?
seems several folks relate it to the annual calendar year budgeting/reporting cycle of business, govt. and the general economy.... does this mean if we changed this calendar to April 1 fiscal year..like in Japan... the crashes might shift to January?
6 Answers
- GemLv 71 decade agoFavorite Answer
Most likely because this is the point that companies (and individuals) figure out how good, or bad, they have done for the year.
The accountants are compiling year to date results. In June, you can still pretend you can make up any shortfall in the next six months. By September, reality hits.
But, just to add some reality, do you know that the real devaluing of the Depression stock market did NOT occur in 1929? As a matter of fact, the market recovered and went higher.
It was the governments failed policy changes (just like now) that caused the deepening of the depression and the true loss in the market came in '33 & '34. That is when it went almost to zero.
It took nearly 20 years to recover back to pre-depression levels.
- Anonymous1 decade ago
The market is a reflection of the economy. As one guy pointed out, by the 4th quarter you know how a company is doing. It also goes that by the 4th quarter you know how well the country's economy is doing. Is it showing signs of major strength or major weakness?
By October, the market has been ready to explode with new money being dumped into the markets traditionally from vacationers returning from summer OR panic is setting in because smart guys have been watching and predicting a crash all year long. Think about this one for a minute...do you think they already know how christmas is gonna go right now? Yes they do.
- Anonymous1 decade ago
I believe it is just a matter of coming off the weakest month of the year on the downside. September has the historically lowest returns as it is at the end of summer, people coming off vacation and returning to school has an effect in lower volumes, employment figures and a whole array of financial data is depressed.
There isn't any concrete reason or pattern to it actually when you consider Oct also represents the all time high just a year earlier.
- salmonsonLv 44 years ago
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- 1 decade ago
First quarter begins of government budget, last quarter begins of normal business budget.
If a business will fail, it will know in the fourth quarter that it's over.
- Celt PaganLv 71 decade ago
Good question. Something to do with the equinox, or the kids going back to school? Who knows?