An October-phobia Treat this Year

October's officially in the "books" and it's a relief among investors that it ended quite well.

When the numbers settled last Friday, the stock market (Dow Jones) gained +2.6% for October, while the Nasdaq stocks rose +4.8%. The S&P 500 Index, used more by the professional money managers, gained half of that, coming in at +2.4%. October's are well-known for their poor performances, but not this year ! 

The most notable October beating was the 1929 Crash that started the Great Depression, where the stock market FELL 89% in 34 months, starting that October 24th - Black Thursday. Back then the Dow Jones Industrial's and Transportation Indexes were the two used and widely quoted. It fell from Dow 381 to Dow 41 ending in the Summer of 1932, - ouch! 

In more recent times, October's have yielded some big falls, and also some big rallies. The October sell-offs include 1978, 1979, 1987* and 2008 as the housing crisis got underway in that last year. However, some of the most powerful market rallies started also in October; such as in 1990, 1998, 2001, 2002, 2011, and the recent market bottom in October 2022 at Dow 28,660. J.P. Morgan Asset management's study reveals that the S&P 500's best days occurred within 2 week's of the 10 worst days using 2005-2025 data. This should illustrate the dangers of market timing; especially during October's. 

The 2022 market low is regarded as the start of this current secular bull market, where stock prices have shot up 66% in three years (Dow Jones) and almost a double, +96% for the Standard & Poor's 500 Index.

Our Model Portfolio** for October tacked on +1.60% in gains. The S&P 500 gained +2.4% as noted above. Aiding in that result was our continued owning of technology stocks via ETF's, +6.4%, and the foreign stock ETF (symbol EFA) rising +1.2%. Our Gold / Silver combo ETF gained +1.58% also. The detractors were Communication Services, -0.50%, and Consumer Discretionary ETF, down 0.2%. Our 10% holding in cash or money funds was a detractor, but is warranted as we rarely are 100% invested, and keep some money on the sidelines in case we need it. The six month Treasury bill was auctioned off at 3.70% on Monday, a continued good home for your cash not invested. 

The important earnings reports out last week changed the landscape a bit. Amazon and Nvidia out-paced expectations, rising in price; while Microsoft and META (Facebook) had muddled results that hit their share prices. These companies, along with Tesla, Google and Apple are the heavy-weights of the market, and their health and profitability is super important to the overall stock market's health. 

Chart below: 3 year Performance of the Dow Jones Industrial Stocks 

They're referred to as the MAG-7, short for Magnificent 7.  These 7 are included in many market indexes and mutual funds also that have technology holdings. If you own stock funds in your retirement plan, I bet you own a few of them.

Gold and Silver continued their historic runs in the third quarter, rising to new highs in mid-October with Gold reaching $4,356 and Silver touching $54.24 the ounce. Then both metals corrected 8% and 10% respectively to settle October a bit lower than that. Still, Gold gained $555 in the 3rd quarter, and is ahead a glittering $1,388 /ounce in 10 months. Silver ran past $50.00, a new all time high dating back to it's prior high near $50 in 2011. Probably not a bad idea to look around in your jewelry box for scrap Gold and Silver, as it's a buyers market now (good for sellers).

2025 has been a blessing to investors with stocks and Gold / Silver rising so much. We advocate to take some profits in them if their value has risen above your allocations set up in your portfolio(s). 

WHAT'S NOT to WORRY ABOUT?

Corporate earnings are hitting the news-wires for the September quarter, and about 80% of them are reported so far. 2/3rds have reported earnings that are ahead of expectations, beating estimates. The Federal Reserve CUT short term interest rates last week, their second rate cut this year. Although inflation is coming down a bit (+3% year-over-year) in the last report, longer term rates - used for loans and mortgages - are not declining much. 30-year mortgage loans are still above 6%; 6.17% last week.

The largest market decline this year was in early April of about 14%; and that was very short-lived. Money manager's performance may lag behind the market gains if they sold out some shares back then. Stocks are now at about +16% so far this year; through October 31. Our performance noted in the footnote is in line with the market. Momentum / new highs get folks in the market via F.O.M.O., (Fear of Missing Out). There's also about $7 Trillion dollars sitting in cash and money market funds that's not invested, so that may enter the market also to find a home. 

These are catalysts to propel stocks higher. Some events / catalysts will come upon us to change this good fortune. They always do. I'll keep you alerted!

So, my advice is to keep over half your money in stocks, diversify around the Sectors we hold now; Technology, Communications, Industrial ETF's, 10% - 15% in Gold / Silver, and 10-15% in short term cash or government short term debt.

Thanks for Reading, and be Safe.
Until Next Post, 

~Barry 
Unterbrink@usa.net

*The 1987 Crash is still clear in my mind, as my father was managing pension fund money then, along with my help; 10/19/87; the largest one-day percentage drop in stock prices in history for the Dow Jones; -508 points, or -22.8%.  

** Our Model Portfolio Performance, 2025 Thru 10/31/25; +16.26%