Mark Twain Effect

The Mark Twain Effect is a market phenomenon where stocks, particularly those in certain industries, tend to underperform during the month of October. The term originated from Mark Twain’s writing, in which he humorously remarked on the dangers of investing in October. While not based on any fundamental market theory, the Mark Twain Effect reflects investors' historical concerns about market volatility during this month, partly due to events like the 1929 stock market crash.

Example

Some investors believe that the stock market tends to perform poorly in October due to the Mark Twain Effect, a phenomenon tied to historical market volatility.