Raise your hand if you have not heard the old adage advising investors that "Bull market bashes end with October crashes".
Events in 1929 and 1987 were riveting of course. They provide what statisticians refer to as "face validity". This is a fancy way of saying that some investors trust the October adage because, on the face of it, there appears to be occasional evidence supporting it.
But if you ferret through all of the historical data, evidence linking October with out-of-the-ordinary stock market weakness is remarkably sparse.
A good starting point is to list every big monthly drop in the UK stock market since the first World War when modern stock market record-keeping first began. Declines of 10 per cent or more are needed to gain a place on this infamous ranking.
The worst month in the group turns out to be September with five listings. Six other months suffered three big drops since World War One.
October rests in the bottom half of the Big Drop list with just two big drops (1979: 11 per cent and 1987: 26 per cent). In case you are wondering, 1929 does not appear on the list because that year's crash was mostly a Wall Street issue. The decline on this side of the Atlantic was only 5.5 per cent, much less than most investors would guess.
History teaches that many big monthly drops were associated with serious military or economic crises. For example, serious battlefield reversals at the beginning of the second World War caused some investors to fear the war could be lost. It triggered several significant monthly price declines.
On the economic front, it generally takes more than a minor slowdown to trigger a big monthly drop. Think in terms of painful recession, coupled with high inflation. One example occurred just after World War One when a serious economic slowdown, coupled with double-digit job losses, triggered some big falls.
More recently, UK investors suffered several big falls during the mid-1970s. Some older readers may recall that we suffered from a steep recession during that period, coupled with high inflation, rocketing oil prices, unsympathetic government policies and labour union dominance.
In other words, while a big monthly decline might come at any time, it generally takes a lot more than a high stock market price or a mild recession to trigger one.
Getting back to October, other historical statistics make a similar point about this month. Despite its poor reputation, October is not particularly special. It should not be viewed any differently than the other 11 months.
It is not common knowledge but prices rose 63 per cent of the time in October during the twentieth century. This performance places October in fourth position on the monthly league tables. It is not quite as good as January and April which rise 75 and 72 per cent respectively but far better than disappointing months like May, June, July and September which rise just half of the time.
Even better, the October trend appears to have improved in recent decades. Prices rose in seven out of 10 years in the 1980s, and eight out of 10 years in the 1990s. The current decade record, so far, is five gains and one decline.
A hypothetical investor who chooses to only hold shares in October would have seen his start-up portfolio grow at an average annual rate of almost one per cent per year, not bad for a single month.
The same single-month investment strategy would have produced zero profits after a century of investing if it were executed in weaker months like May, June or September.
But a scan through all October statistics does produce one interesting surprise. Prices do not rise by an equal amount throughout the month. The strongest part of the month is the first week. During the last few decades, shares rose in seven out of 10 years from October 1-8. As far as this year is concerned, October appears to be following the norm.
Unfortunately, the daily price trend often then takes a turn for the worse. Shares rose just 38 per cent of the time from October 9-26. Let us hope all hope this year does not follow the norm.
The historical trend improves during the last few days of October. Since 1977, shares rose two-third of the time in this final segment of the month.
The bottom line: Investors would do well to ignore the headlines. We are currently in a "plain vanilla" normal month – to be monitored and respected because we are late in the current stock market cycle, not because it is October.
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