Friday, August 7, 2009

Beware of "Black October"

A recent market update by Kingfish Ltd [KFL.NZ] the listed portfolio management vehicle, got me thinking.

In this document they wax lyrical about how well share prices for the companies they hold have done well over the last quarter and they are right, they have done well.

Ryman Healthcare [RYM.NZ] Freightways Ltd [FRE.NZ] Mainfrieght Ltd [MFT.NZ] Sky City Entertainment Group[SKC.NZ] and many others have stacked value on their share prices.

Sky City alone has gained over 40% since its recent $2.51 lows.

Kingfish have all these companies in their portfolio bar Sky City. I own them all in the Share Investor Portfolio.

But rather than reason to get excited if you are an investor with a shorter term horizon you are likely to get a bit of a shock in the back pocket, if stockmarket history is anything to go by.

The month of October is notoriously bad for global markets, the 1929 crash happened in October and so did the 1987 crash - the 2008 crash likewise. Even if you discount those three historical events October is just a bummer month for stocks, it is probably a psychological thing where historical events have self perpetuated into a down month.

Nevertheless it does happen and that month could be the time to start buying again. My wallet is firmly closed, for now.

Take care of yourselves, be careful when deciding to buy and make some money why don't ya.

See you soon.

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The Great Crash: How the Stock Market Crash of 1929 Plunged the World into Depression
The Great Crash: How the Stock Market Crash of 1929 Plunged the World into Depression by Selwyn Parker
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