October Market Crashes

by Jeff C. Johnson

Stock brokerage types and hobbyist investors love to speculate about the next “market crash,” and they often mention the historic crashes in past Octobers. Boy, do I remember the “Crash of ’87.” I was there that October, right in the front row for that one.

 There are all kinds of data to review and to use to project guesses about the future. Frankly, it makes good reading and viewing, so financial journalists and media personalities perpetuate these speculations.

 As for me, I prefer to look at the long-term evidence rather than making guesses about random events. Long-term ownership of stocks is what has produced solid returns in the past, even during my short thirty-plus years as a financial professional.

 In my first book, The Extreme Retirement Planning Workbook, I give an assignment to my readers to study market returns for short-, medium-, and long-term periods of time.

 You should complete this project (or buy a copy of the book and read the conclusions I draw), and you will learn what is a reasonable long-term holding period and what range of historical returns seem possible, based on actual performance. (Past performance is not a guarantee of future results.)

 Examining five-, ten-, twenty-, and forty-year time periods for market and investment performance is a strong motivation to look past the pundits of the day who suggest that it’s possible to guess market moves and to use timing to move in and out of your market positions.