Should You Really Sell Stocks in October?

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You should be cautious with stocks in October.

This idea has circulated in financial markets for decades.

Several of the most memorable market crashes in history occurred in October, from the sharp sell-off during the 1929 Wall Street crash to Black Monday in 1987. Over time, this gave rise to what investors now call the October Effect.

Recent Korean market data also suggests that October has not always been an easy month for investors.

Over the past 10 years, the KOSPI rose in October four times and fell six times.

So does that mean investors should really reduce their equity exposure every October?

A closer look at the data tells a more nuanced story.

Why Was the Average Return Positive If the Market Fell 6 Out of 10 Times?

Source: Chosun Ilbo

Over the past 10 years, the KOSPI rose in October only 40% of the time.

But the average October return was still +0.28%.

This is because how often the market rises and how much it rises are different things.

For example, the KOSPI jumped 19.94% in October 2025.

That one strong month pushed the 10-year average higher. Without 2025, the average October return from 2016 to 2024 would have been -1.91%.

This shows why average returns alone can be misleading.

Why Then Is October Remembered as a Month of Fear?

Source: Maeil Business Newspaper

October is remembered because several major crashes happened during the month.

In 1987, the Dow Jones fell 22.6% in one day on Black Monday.

In Korea, the KOSPI fell 13.37% in October 2018 and 7.59% in October 2023.

Large market crashes leave a stronger memory than normal market moves.

That is one reason investors still associate October with higher risk.

But those markets did not fall simply because it was October.

The Drivers of the Market Were Different Each Year

Source: LifeUp Trading

In 2018, the market was pressured by rising U.S. rates, higher Treasury yields, U.S.-China trade tensions, and concerns about global growth.

In 2023, higher-for-longer rate expectations and rising geopolitical risks weighed on stocks.

In 2025, the KOSPI rose nearly 20%, supported by AI and semiconductor stocks.

The month was the same.

The market environment was not.

What mattered more was interest rates, economic conditions, corporate earnings, and geopolitical risks.

Why Do Rising Interest Rates Put Pressure on Stocks?

Source: Hankook Ilbo

Higher interest rates can increase borrowing costs for companies.

They can also make bonds more attractive compared with stocks.

This can reduce the amount investors are willing to pay for equities, especially growth stocks.

Oil prices also matter because higher energy costs can hurt industries such as airlines, transportation, and chemicals.

In short, interest rates and oil prices can affect both company profits and stock valuations.

Corporate Earnings Remain One of the Most Important Drivers of Stock Prices

Source: Nate News

Not every company reacts to the same market environment in the same way.

Strong earnings can help offset pressure from higher rates or higher costs.

Weak earnings can have the opposite effect.

That is why investors should look at more than whether revenue or profit increased.

They should also check:

• What the market expected
• Whether the company met those expectations
• What the company says about future performance

Stock prices reflect not only current earnings, but also expectations about future earnings.

Use AlphaLenz to Look Beyond the October Effect

Historical seasonality can be useful, but it should not be the only factor investors consider.

With AlphaLenz, investors can review earnings, consensus estimates, filings, and company news to see how fundamentals and market expectations are changing now.

Recent estimates show that companies are already moving in different directions ahead of Q3 earnings season.

• Samsung Electro-Mechanics has seen earnings expectations rise as demand for AI server components grows.
• By contrast, Cheil Worldwide has faced lower earnings expectations as major advertisers reduce marketing spending.

So even in the same October, companies can face very different conditions.

Rather than focusing only on the October Effect, it is more useful to look at each company’s actual demand, costs, and earnings outlook.