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Dow looks to dodge curse of years ending in 7

Will the curse of the calendar doom stocks again this October?

October is best known for stock market crashes in 1929 and 1987. But what investors may not know is that many of the market’s worst-ever drops have occurred in October when the last digit of the year ends in a 7, notes Paul Schatz, chief investment officer of Heritage Capital, a personal investment management firm in Woodbridge, Conn.

What’s up with this seasonal stock market quirk?

Well, in 2007 stocks rallied into October only to hit a wall amid lofty valuations and early hints of the coming mortgage crisis. October turned out to be the top in the 2002 to 2007 bull market and the start of the worst stock market decline since the Great Depression.

In 1997, a currency crisis in emerging markets sparked panic selling that briefly pushed the Standard & Poor’s 500 stock index down nearly 10% in October.

And pretty much everyone knows that on Oct. 19, 1987, the Dow Jones industrial average suffered its biggest one-day percentage drop ever. The 22.6% plunge is referred to as “Black Monday.”

But so far this year, October has bucked the trend. The Dow has rallied to new highs the first two trading days of the month amid continued economic optimism. Still, October and years ending in 7 are “something investors need to be aware of with North Korea percolating,” Schatz says, citing a geopolitical event that could upend markets.