Stocks tumble on inflation and debt ceiling worries. Many risks remain but outlook still promising for stocks. Of course DC headlines could still roil the market this year, albeit not because of an election. The debt ceiling debate has yet to be resolved, and Congress still hasn't passed President Joe Biden's infrastructure and social spending plans. Meanwhile Biden also must soon decide whether he wants to nominate Jerome Powell for a second term as Fed chairman or pick someone else.
That said, Navellier is hopeful the usual seasonal tailwinds for the markets and the broader economy will lift stocks this year. A key measure of inflation surged to a new year high. Stocks tend to enjoy not just solid gains in October, but also for the remainder of the fourth quarter. Consumer spending surges during the holiday shopping season and businesses often look to boost investments before annual budgets run out.
With that in mind, some strategists think that investors will continue to focus on the positive when looking ahead to earnings for Q4 and Yes, worries remain about Covid, Fed policy, inflation, global shipping delays and numerous other economic warning signs. The fact that it is viewed negatively may actually make it one of the better buying opportunities for contrarians. Slides in , , , and turned around in October and began long-term rallies.
In particular, Black Monday was one of the great buying opportunities of the last 50 years. Peter Lynch , among others, took this opportunity to load up on solid companies that he'd missed on their way up. When the market recovered, many of these stocks shot up to their previous valuations and a select few went far beyond.
October gets a bad rap in finance, primarily because so many black days fall in this month. This is a psychological effect rather than anything to blame on October. The majority of investors have lived through more bad Septembers than Octobers, but the real point is that financial events don't cluster at any given point.
The worst events of the — financial meltdown happened in the spring with the collapse of Lehman Brothers. Stocks tend to fall in November and December due to year-end rebalancing and tax optimization e. Although it'd be nice to have financial panics and stock market crashes restrict themselves to one particular month, October is no more prone to bad times than the other 11 months of the year.
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The Bank Panic of Stock Market Crash of Not bad. But it gives you an idea. The anniversary of the two worst crashes in U. Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark hulbertratings. More: September was a terrible month for stocks. Also read: Buy the dip has failed. Chip makers' stocks have also been soaring as companies push into new industries.
Mark Hulbert is a columnist for MarketWatch. His Hulbert Ratings service tracks investment newsletters that pay a flat fee to be audited. Appeals court temporarily blocks release to Jan.
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