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Making sense of the markets this week: October 12

October 9, 2020 Dale Roberts
Making sense of the markets this week: October 12

Photo by David Menidrey on Unsplash

Each week, Cut the Crap Investing founder Dale Roberts shares financial headlines and offers context for Canadian investors.

It’s October. Will stock markets get spooked again?

October is, historically, the most volatile month for U.S. stocks. In fact, it was kind enough to author two of the most violent stock market crashes in history. Those showed up in 1929 and 1987. 

So hang on to your hat, because October 2020 might be a wild ride. But MarketWatch says it’s also an opportunity… 

“October is coming. The most volatile month of the year for the U.S. stock market is here but if you’re prepared there’s nothing to fear. In fact, the market typically rises in October and combined with the volatility, gives investors one of the best opportunities for getting into stocks of the entire year.”

The month also precedes elections that land in November. Does that timing factor in? MarketWatch also offered… 

“You might also wonder if October’s above-average volatility can be traced to the month coming immediately prior to elections (both presidential and midterm). But again the answer is ‘no.’ The stock market in October is more volatile than in any other month even if we focus only on the first and third years of the presidential cycle.”

So, it isn’t election-related. Across the board, October is simply a spooky month. And if stock market history repeats, those tricks (corrections and lower stock prices) might turn out to be a treat. Stick to your investment strategy. 

 Out with the old energy stock and in with the new

ExxonMobil was once the most valuable company in the U.S.—and on the planet. It held one of the top weighting positions in the S&P 500 for many years. But said planet is changing and, for a while, anyway, ExxonMobil was supplanted by NextEra Energy as the most valuable energy company in the U.S. 

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