You know what’s truly frightening?

The 1929 stock market crash that started the start of the Great Depression.

And the largest single-day market crash in history.

And the bankruptcy of Lehman Brothers.

Not to mention: that time the NYSE crashed by 50 percent.

What do all these events share in common? They all happened in October.

What is it about October that brings out the demons? It’s happened enough that it feels like more than just a coincidence. But there’s no apparent correlation between these events except for the fact that they happened in the same month as Halloween.

Boo!

Here’s a brief anthology of some ghoulish Octobers in stock market history.

October Stock Market in 1907: The NYSE Drops 50 Percent

In October 1907, speculators poured into the stock of a well-known copper company. Their scheme backfired.

The banks that had provided funding to the speculators – most notably the giant Knickerbocker Trust Company of New York – saw painful losses. The market went into freefall.

The New York Stock Exchange fell over 50% from its previous high mark.

As you might imagine, people panicked. The panic was so severe, it threatened to bring down the entire U.S. financial system.

We needed a hero.

Fortunately, we found one. The ensuing panic threatened to bring the financial system to a standstill until J.P. Morgan – the man himself, not the institution – stepped in withpropped up the markets with his own capital. He single-handedly stabilized the system and helped unwind the failed banks.

Little did anyone know that the Panic of ’07 would be the first in a long string of frightening October busts.

October Stock Market in 1929: A Stock Crash That Defines a Generation

Fast-forward 22 years.

October 24 fell on a Thursday in 1929. Stocks had been on a fervid bull run for most of the second half of the 1920s, peaking in September of 1929. But massive sell orders hit the floor on the October 24, just one week shy of Halloween.

The New York Stock Exchange held the panic at bay for a few days, but they couldn’t stymie the pressure forever. By the following week, all hell broke lose.

The Dow Jones Industrial Average lost more than 23% on Black Monday, October 28, and Black Tuesday, October 29.

By 1932, the Dow Jones Industrial Average would lose over 80% of its value from the September 1929 high. The entire nation plunged into a deep Depression, one that defined a generation.

It wouldn’t regain that value until a decade after the Second World War.

October Stock Market in 1987: The Largest Single-Day Drop in History

Think that was bad?

Just wait.

Two generations later, October heralded the largest single-day loss in US market history. On October 19,1987, all major market indexes dropped more than 20 percent.

But in hindsight it turned out to be far less damaging than the Great Crash of ’29. The automated trading systems that unleashed massive sell orders exacerbated the crash. This was the first time in history that technology drove the stock prices down in a massive way, beyond human control.

October Stock Market in 2008: Here We Go Again!

The defining event of the 2008 stock market collapse — the bankruptcy of Lehman Brothers – happened in September. The markets saved their worst mayhem for, naturally, another October stock market surprise.

The most recent October crash was related to insurance company AIG’s failure. Trillions of dollars of so-called credit default swaps and collateralized debt obligations began to unravel, with consequences that struck every financial institution in the nation. The government scrambled to put together a bailout, but in the meantime, the market crashed nearly in half.

October has historically been a frightening month in the world of stock market spooks. Fortunately, we’ve escaped October 2013 unscathed. In spite of a government shutdown, the stock market has stayed strong. Perhaps this Halloween, we can fall asleep unafraid.

Tell us … Why do you think there are so many October stock market surprises?

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