Anyone worried about the "October effect" can breathe a big sigh of relief. There's a relatively widespread -- yet unfounded -- view that the tenth month of the year is usually bad for stocks. As it turned out, the stock market actually performed quite well this October.

But for some investors, fretting comes as naturally as breathing. It's tempting to merely carry anxieties about a potential market disaster forward. 

Is there any reason to chew your fingernails over a possible stock meltdown this month based on history? How many times has the stock market crashed in November? 

A person holding fingers to bridge above nose while looking at a laptop.

Image source: Getty Images.

The biggest crashes

There's good news and bad news from the biggest stock market crashes in history. First, the good news: None of them began in the month of November. That should be at least somewhat comforting to anyone who's worried that history will repeat itself.

The most recent market meltdown, of course, started in late February 2020 as the coronavirus began to spread rapidly around the world. Before that, the huge financial crisis of 2008 had the most significant impact on the stock market during October.

What about the bursting of the dot-com bubble? That one happened over a relatively long stretch, although two of the biggest monthly declines came in March and September 2001. 

The bad news, though, is that major market crashes have extended into November in the past. For example, the infamous 1929 crash began in late October but stocks kept on plunging well into November.

Year by year

Let's look at how the S&P 500 has performed in November over the last 40 years. There's actually a pretty good story.

Chart showing S&P 500 gain/loss during month of November by year from 1981-2020

Data source: YCharts. Chart by author.

The average return for the S&P 500 during the month of November of the last 40 years is 1.57%. The median return is even better -- 2.41%.

The S&P 500 delivered a positive gain during November in 29 of the last 40 years. In six of those years, the index achieved returns of 5% or more. It also came very close to hitting that level in one other year.

Only three times during this lengthy period did the S&P 500 index fall by more than 5% during November. And those were all continuations of major market downturns that began earlier.

Don't worry

Perhaps the best antidote to worry is taking action. For example, perhaps you're concerned that stock valuations are at a premium right now. You might want to increase your cash position so that you can buy more heavily in the event there is a downturn.

Even Warren Buffett isn't buying many stocks these days. He's led Berkshire Hathaway (BRK.A 1.48%) (BRK.B 1.06%) to increase its cash stockpile to nearly $141 billion. And Buffett is being very selective on the stocks that he is buying. Berkshire bought shares of only three stocks during the third quarter.

There's a better alternative to worrying about stocks even if we had reason to believe that this month could bring a market downturn. Instead of focusing on what the stock market might do in one month, think about what it always does over the long term -- go up.

If you have a long-term mindset, even a major pullback shouldn't rattle you all that much. Buffett himself has weathered several market meltdowns. By keeping his eyes on the long run, he became enormously successful. 

Even if you're still tempted to worry, remember that there's no need to be concerned about a negative November effect from a historical basis. If there's any effect at all, it's a positive one.