S&P 500's best October ever? Maybe yes. Maybe no

By Dian Vujovich

You’d better wait until the market closes on Monday before popping the cork on that bottle of Dom Pérignon in celebration of the S&P 500s rip roaring October performance. Even though that index is on track to possibly wind up the month with its best one-month October gains in decades, it still has to move ahead a few percentage points to win that accolade.

Looking strictly at the numbers, as of Friday, (10/28/11), the S&P 500 and had gained 14.12 percent for the month. The best ever October for that index was in 1974 when it gained 16.3 percent. So, Monday the average needs to gain over two percent to beat its own previous October-only performance record. The S&P 500 closed Friday at 1285.09.

Accomplishing that feat is definitely doable provided that Halloween doesn’t spook market players.

But even if the index does score top its own record, there’s no assurance that that upward trend will continue in the following month. After the October 1974 one-month gain, for instance, the S&P500 fell 5.32 percent in November.

According to SeekingAlpha.com, since 1928 there has only been 27 times in which that index rose over 10 percent in one month. (That’s out of a boatload of months—something like roughly 996 between 1928 and 2011.) And, only three times that it had back-to-back gains of 10 percent or more. They were: In July 1932, the S&P500 closed up 36.12 percent and one month later, in August, gained 39.14 percent; in April of 1933 the index gained 33.85 percent and in May was up another 23.12 percent; and following that same May, the index rose another 13.17 in June, 1933.

The biggest fall following a one-month gain of 10 percent was, curiously enough, also in 1933: In August that year the S&P500 gained 11.46 percent and in September lost all of those gains plus some—it fell 12.35 percent.

So don’t get the bubbly out just yet because we’ve still got a day’s worth of trading to live through. Plus, a one month performance report is only that and no doubt matters, but, is likely to matter the most to someone who only invests one month a year and happens to have chosen this October to do so.

For the masses, however, it’s the longer-term investment time frame that winds up counting the most. For all of them I’ll fill a flute, any time or any day.