Historically, stock markets often find September tough, but October wins the prize for unpredictability. Notably, October saw the great Wall Street crash of 1929 and Black Monday in 1987.

While many investors dread October, it’s sometimes called the “bear market killer”. This is because several bear markets have ended during this month. After the S&P 500’s nearly 5% drop in September, everyone’s watching October closely, especially with the 36th anniversary of Black Monday coming up.

What makes today’s scenario interesting is the abundance of experts cautioning about potential risks. Some context: Black Monday seemed unexpected. Theories suggest that after years of stock market growth, many thought the markets were valued too high. This, combined with the US’s consistent trade and budget deficits and rising interest rates, created a storm. Interestingly, many of these factors are present today.

The US’s debt recently surpassed $3 trillion. To make matters more complicated, the US Federal Reserve hinted at more interest rate hikes, even though rates are already at 5.5%. This means bonds might suffer, as rising interest rates typically make them less attractive. Barclays analysts even suggest that a significant stock market downturn could be the only savior for bonds.

Investment director Russ Mould points out that the era of low or zero interest rates might be ending. This change affects not just shares but other assets like cryptocurrencies. As he puts it, after a big party often comes a big hangover.

Some experts, like Albert Edwards from Société Générale, suggest the market is following a pattern similar to before Black Monday. However, there’s also a positive spin. Despite recent downturns, Ed Yardeni of Yardeni Research predicts a market rally in 2023. Additionally, history suggests the S&P 500 often rebounds after a bad September.

Vijay Valecha, a chief investment officer, even sees potential opportunities. He suggests that the current market volatility might be a chance to invest before a possible year-end surge. Brave investors might look at tech stocks or US Treasuries, which offer high yields now due to their low prices.

However, investing during downturns comes with risks. No one can precisely predict when the market will bounce back. As always, October might be the month that determines the market’s direction.