October Is Here.. What Usually Happens to Stocks

Nolan states that despite widespread "Octoberphobia" stemming from famous market crashes like those in 1929, 1987, and 2008, historical data reveals a more nuanced picture. He explains that while October can be volatile, its average returns for the S&P 500 since 1950 have been positive (0.8-0.9%). More recently, from 2004 to 2024, October ranked as the fifth-best month for the S&P 500, with average gains ranging from 0.3% for the Russell 2000 to 1.1% for the Dow and Nasdaq. Nolan attributes the perception of danger to the month's characteristic volatility, particularly at the beginning of October, often followed by stronger performance mid-to-late month.

Crucially, Nolan emphasizes that 2026 is a midterm election year, which historically alters October's performance significantly. In midterm election years (data from 1950-2017), the S&P 500 has averaged a substantial gain of 3.3% in October, making it the strongest month of the year within this specific cycle. Other indices showed similar strength, with average October returns of 3.1% for the Dow, 3.3% for the S&P 500, 4.2% for the Nasdaq, and 3.9% for the Russell 2000 in midterm election years. Furthermore, Nolan points out October's role as a "bear killer," having marked the turning point for 13 bear markets since WWII, often coinciding with midterm election years. This counterintuitive trend suggests that the month associated with crashes is also vital for market recoveries.

Nolan also highlights that October's importance extends beyond its monthly performance; it marks the end of the seasonally weaker six-month period and transitions into historically strong months like November and December. Historically, the market has risen from its October low to December 31st in approximately 93% of years since 1957, with an average gain of about 7.4% from that low.

For investors in 2026, Nolan advises against automatically fearing October. While acknowledging that larger forces like interest rates, inflation, and corporate earnings can override seasonal patterns, he encourages long-term investors to avoid panic during potential volatility. Instead, Nolan suggests watching for market weakness as it could create better buying opportunities for long-term growth. He recommends observing fundamentals and not succumbing to media-driven fear. Nolan also promotes his 8-week live course for building a resilient portfolio and suggests watching his video on a simple "three-fund portfolio."