Stress-Test Parameters
Equity Allocation
80%
10% Equities
Balanced 60%
100% Equities
Fear Sentiment Index
65
Greed (10)
Moderate (50)
Extreme Panic (95)
Lookback Horizon
30 Years
Full liquidation at perceived bottom with cash sitting out the initial rebound window.
Portfolio Trajectory: Disciplined Holding vs. Emotional Reaction
120 Trading Day Window
Key Analytical Finding: With an 80% equity weight, a seasonal October market pullback inflicts an expected peak drawdown of 12.4%. Liquidating during peak fear creates a permanent $24,850 capital lag compared to holding through the 42-day recovery cycle.
Historical October Volatility & Drawdown Audit
While October carries a reputation from famous historical corrections (1929, 1987, 2008), historical lookback shows October is historically the "turnaround month" marking the onset of the strongest quarter of the year.
| Event / Period | Peak Equity Drop | Total Duration | Days to Parity | Subsequent 6M S&P Return |
|---|---|---|---|---|
| 1987 Black Monday | -22.6% (1-Day) | 34 Days | 285 Days | +14.8% |
| 1997 Asian Contagion Dip | -7.0% | 12 Days | 24 Days | +18.4% |
| 2008 Global Credit Shock | -16.8% | 45 Days | 142 Days | +27.1% |
| 2014 Rate Hike Scare | -7.4% | 14 Days | 31 Days | +11.2% |
| 2018 Autumn Liquidation | -9.8% | 28 Days | 68 Days | +17.5% |
| Historical 30-Yr Mean | -15.5% (Max Avg) | 24 Days | 42 Days | +16.3% |