In some
stock market
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...
s, the Mark Twain effect is the phenomenon of stock returns in October being lower than in other months.
The name comes from a line in
Mark Twain
Samuel Langhorne Clemens (November 30, 1835 – April 21, 1910), known by his pen name Mark Twain, was an American writer, humorist, entrepreneur, publisher, and lecturer. He was praised as the "greatest humorist the United States has p ...
's
Pudd'nhead Wilson
''Pudd'nhead Wilson'' (1894) is a novel by American writer Mark Twain. Its central intrigue revolves around two boys—one, born into slavery, with 1/32 Black American, black ancestry; the other, White American, white, born to be the master of the ...
: "October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February."
The quotation is a sarcastic assertion that speculation in stocks is always dangerous. The fact that Twain specifically picks out October initially is taken as a reference to an "October effect", as exemplified by the 1929, 1987 and 2008
stock market crash
A stock market crash is a sudden dramatic decline of stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especia ...
es which roughly occurred in October.
See also
*
January effect
The January effect is a hypothesis that there is a seasonality, seasonal market anomaly, anomaly in the financial market where security (finance), securities' prices increase in the month of January more than in any other month. This calendar effec ...
References
Stock market
Calendar effect
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