Some investors believe that stocks are especially prone to decline in the month of October, a tendency sometimes referred to as the Mark Twain Effect. The name comes from Twain’s novel Pudd’nhead Wilson, whose title character observed that October “is one of the peculiarly dangerous months to speculate in stocks” — along with the other 11 months. Test your knowledge of notable October market downturns by taking our quiz.
1. The Panic of 1907, during which the New York Stock Exchange fell nearly 50% from its peak in 1906, was triggered in October of that year by a failed attempt to corner the stock in one company. Which company was it?
A. United Copper
B. Amalgamated Silver
C. Domino Sugar
D. National Lead
2. The Great Crash began on October 24, 1929, and culminated in Black Monday (October 28), when the Dow Jones Industrial Average fell 13%, and Black Tuesday (October 29). How large was the Dow’s decline on Black Tuesday?
3. Five of the 10 largest single-day percentage declines in the Dow occurred in the month of October. The largest took place on October 19, 1987, also known as Black Monday. How large was it?
4. Three of the Dow’s 10 largest single-day point declines occurred during October. The second-largest took place on October 15, 2008, during the financial crisis. How large was it?
5. The Friday the 13th mini-crash of October 13, 1989, when the Dow fell nearly 7%, was supposedly triggered by the collapse of a leveraged buyout deal. What was the company involved?
6. Sparked by the Asian financial crisis, the October 27, 1997, mini-crash started in Hong Kong and spread to the U.S., where the Dow fell 554 points, or more than 7%. How did the Dow perform on October 28?
A. Fell 2%
B. Fell 4%
C. Rose 3%
D. Rose 5%
Numbers are rounded. Source: Wikipedia
Answers: 1–A; 2–A; 3–C; 4–B; 5–B; 6–D