There is no reason to panic with all the big news about the bull market—October is known for volatility. When you look back at the past 20 years, October has actually been one of the top performing months—historically, the best fourth month. No other month sees 1%, 2%, or 3% moves than October—which we think is perfectly normal in the overall structure of a major bull market.
Since 1980, the average S&P 500 Index year sees a 14% peak to trough correction, as shown in the chart. Half of the years since 1980 have seen at least a 10% correction. Market corrections are normal, but we believe things may go a little better than expected in the fourth quarter. Historically, when the S&P 500 is up at least 12.5% coming into the fourth quarter—for nine of the last ten years—stocks were up during the fourth quarter when there was a big gain coming into it.
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All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
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