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Will History Repeat Itself, Thanks To The Shutdown? An October To Remember.

October 2, 2013

First off let me say; I am not an expert on economics, or the stock market. I only know what I have read, and discussed with those who know about these subjects.

I was wondering, with it being October an infamously unlucky month for the stock market as history points out. Then you have the government shutdown, could we have a another crash coming.

In 2008 we saw October bring a crash which robbed many people who left their money in their 401K’s instead of moving it in to something a bit safer. It was a hard hit on older Americans. It was a hit on the economy that we are just barely half way recovered from.

Now let’s get into the “Way Back Machine” and travel back to 1995-96. Bill Clinton is the President, Newt Gingrich is the Speaker of The House. The Republican controlled Congress and the President are have conflicts over funding, Medicare, Education, Public Healthcare and The Environment, in the 1996 Federal Budget. The Republican “Spending Bill was vetoed by Clinton and it triggered the Republican shutdown of the Federal Government.

That Shutdown lasted 28 days, November 14th through November 19th 1995 and then December 16, 1995 to January 6, 1996. Newt Gingrich was held in high esteem for standing down the President. The Shutdown took it’s toll though, the market crashed soon after.

October 27, 1997 the Global Stock Market suffers a mini-crash. The DOW Jones suffered its 8th greatest loss since its start in 1896. This mini-crash is considered by many experts as “The beginning of the end” of the economic boom of the 90s in the U.S. and Canada.

By today’s standards, trading volumes of the 1996 and 1997 crashes were small. However, none the less we are looking at what some economist are calling the perfect storm set to ignite anther Global mini-crash.

My advice is to check with your consultant and do what is right for you. All I can say is I know people that lost a bundle by doing nothing in October 1997 and in October 2008. I will be playing it safe October 2013 and the months that follow.

ABA

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