OCTOBER 30, 2000 VOL. 156 NO. 17

ALSO IN TIME COVER: Clash of the Japanese Titans The country celebrates a bygone era as teams managed by two legends do battle in the national championship • The Wizard: Seattle Mariners relief ace Kazuhiro Sasaki made a remarkable debut in America's Major Leagues THE PHILIPPINES: High-Stakes Gamble Vice President Gloria Macapagal Arroyo faces an uphill struggle as leader of the movement to oust President Joseph Estrada TAIWAN: Unjustly Accused Commentator Sin-ming Shaw argues that President Chen Shui-bian is doing better than the headlines would have one think STOCK MARKETS: What Goes Up ... As pundits vie to interpret the wild rollercoaster ride of most share indexes, one thing is clear: the New Economy is ailing • Viewpoint: If it keeps you awake at night, don't own it MEMORY: Recall and the Middle-Aged Mind Fortysomethings have a hard enough time watching their waistline and hairline go; now it's their memory. Bookstores, health-food shops and websites are awash with products that claim to sharpen the aging brain. Do they work, and should you try them? Plus: test your memory • The Brain: How memories form • Alzheimer's Disease: When it's not mere forgetfulness CINEMA: Asia's Storymaster Hong Kong director Tsui Hark encapsulates two decades worth of technique and worldview into Time and Tide INNOVATORS: Money and Finance Wheels of fortune TRAVEL WATCH: Surfing in the Sky: The Net Takes Flight

Seasonal Swings
Is October really a jinxed month?
By CHARLES P. ALEXANDER

ALSO
STOCK MARKETS: What Goes Up ... As pundits vie to interpret the wild rollercoaster ride of most share indexes, one thing is clear: the New Economy is ailing
Viewpoint: If it keeps you awake at night, don't own it

Beware! It's October, the scary month for investors. The Wall Street crash in October 1929, heralded the Great Depression. Oct. 19, 1987—the "Black Monday" when the Dow Jones industrial average fell 22.6%—was the worst single day in U.S. stock-trading history. Markets also took huge October dives in 1989, 1997 and, here we go again, 2000. Even with last week's late rally, it's been a very bad month. Is there a cause behind this curse or just grisly coincidence?

Actually, a little calm research, unruffled by the prevailing paranoia, reveals that a few well-publicized disasters have given October an undeservedly bad rep. If you look at the Standard & Poor's 500 index over the past 50 years, as the Stock Trader's Almanac did, you find that the worst month for investors is really September, when the S&P 500 suffers an average loss of 0.2%. Every other month is in positive territory on average. Even October. In fact, five different months have worse performances over the past half-century than October.

What, then, causes the annual September swoon that sometimes precedes an October collapse? Some analysts have suggested that investors, at least in the Northern Hemisphere, sell stock to pay for the summer vacations they just took. Surely that's not the whole story. A more sophisticated theory holds that with the end of summer corporations often begin to lower their projections of the year's profits. They have been optimistic for the first half of the year, but by the time September comes they realize their targets are too high and start to get more realistic. As profit estimates are reduced, investors dump stocks.

In October an added pressure comes into play. That month marks the end of the fiscal year for most mutual stock funds, and their managers often sell poor-performing stocks to tidy up portfolios and take some losses that will reduce the tax liabilities of the funds' shareholders.

None of this comes close to explaining the great crashes of October. But it's fair to say that the post-summer period is generally a vulnerable time in the market, and any unexpected bad news can push stocks over a cliff. In 1987, it was anxiety about America's falling dollar and ballooning trade deficit. In 1997, it was the deepening financial crisis in Asia. This year it's the Internet slump, surging oil prices and violence in the Middle East.

But take heart. Maybe this October has already shown us its worst. Here's a good omen: on Oct. 19, the 13th anniversary of Black Monday, the Dow Jones industrial average rallied for a 1.7% gain. Not fabulous, but not bad for October.

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