This month has been the most volatile ever for S&P 500 stock investors. It's also on track to be the worst month for the index in a decade.
October 2018 has lived down to its reputation in the stock market. The Panic of 1907, Black Tuesday of 1929, Black Monday of 1987 all occurred in October of their respective years. Two of those hit early in what would become crippling economic recessions. The American economy kept booming through the stock crash of 1987.
While today's investors have experienced similar swings measured in points, the percentage moves this month pale in comparison to those historic, destructive drops.
The economy today is growing. Unemployment is low. Corporate profits are up. Inflation, while rising slowly, remains historically low. Those economic fundamentals paint a picture of a strong and stable economy. These are among the data the Federal Reserve rests its decisions upon to raise interest rates.
Meantime, fear in the market has been growing. It has been fed by many factors: rising interest rates, a growing federal budget deficit, a stagnant personal savings rate, record corporate debt, crushing student loan debts, and trade tensions with China and the European Union, among them.
The fight in the stock market between fundamentals and fear plays out in the week ahead. The Fed's favored inflation gauge _ personal consumption expenditures _ is released Monday. October jobs data comes out on Friday. And the election frenzy hits a fever pitch.
Long-term investing is not the triumph of hope over experience. It is equal parts of both.
