It happens every September and October, when analysts and investors start talking nervously about a stock market crash.
This is understandable, given that historically September is the worst month for stock market performance.
As US investor Paul Hickey at Bespoke recently calculated, if you had invested $100 in the US market 50 years ago and only held it there during the month of September, today it would be worth just $71. September is a bad month.
After September, comes equally notorious October. It is particularly notorious this year, because it marks the 30th anniversary of the biggest one-day market crash of all time, Black Monday on 19 October 1987.
The original Black Monday was also in the same month, 28 October 1929. October is also a bad month.
Paint it black
Three decades ago this very week the Dow Jones fell 22.6 per cent with $500 billion wiped off share values in a single day.
This was far worse than on Black Monday during the Wall Street crash of 1929, when the market dropped a relatively modest 12.8 per cent.
The FTSE 100 also fell 10.8 per cent and “lost” £50 billion, with new computer systems crashing as panic-stricken investors rushed to dump stock.
Many feared the entire financial system would shut down, and were bracing themselves for a repeat of the 1930s depression, but it didn’t happen.
Bull market crash
Nobody can say for sure what caused Black Monday. Likely culprits include the widening US trade deficit, rumours that the US House of Representatives would scrap tax breaks on company managers, and algorithmic trading systems.
There is one uneasy parallel with today. Black Monday followed a bumper spell for stock markets, with the Dow up a dizzying 27.66 per cent in 1985, then another 22.58 per cent in 1986.
By August 1987 the US market was up 40 per cent and investors started to worry that share prices were overvalued.
Investors have the same worry today.
As I write the FTSE 100 has just hit a record high and analysts are clogging my Inbox with emails claiming it will all end in tears.
They have been warning about the overvalued the S&P 500 for months, which has hit levels of overvaluation only seen during the dot-com bubble and in 1929, around 31 on the Shiller PE ratio.
After eight years of bull market, we could be due a global crash. Who knows? I don’t, although it is fun to speculate.
If it happens, the true lesson of Black Monday is this. It will pass. Despite the chaos, stock markets actually ended 1987 higher than they started, then went on a tear throughout the 1990s.
Investors who kept their nerve during the meltdown, and were even brave enough to buy shares, were amply rewarded.
The great crash of 2017 may never happen. Over the last 20 years, the fourth quarter has easily been the strongest of the year. Either way, the only thing advisers can do is keep calm and carry on.
November is coming. That’s usually a good month.