There are a lot of great myths about the stock market, e.g. "Sell in May and Stay Away," referring to the almost yearly summer doldrums in the market. Probably the single greatest myth is that the worst stuff always happens in October - the '29 crash foretelling the great depression was Black Monday and Black Tuesday, October 28th and 29th. The market lost 25% in one day on Black Friday, October 16th 1987. And, well, this year. . .
There are a lot of Christian holidays, and each has a different story. There are a lot of Jewish holidays, but they all have roughly the same story: They attacked, we survived, let's eat! That's about all I have to say about October '08: it attacked, we survived, let's eat.
Anyway, October is over now.
Another myth, btw, is that democrats are better for the stock market than republicans. The NYT published an article a couple weeks ago claiming that if you started with $10,000 in 1929, and invested it in the stock market, but only during republican administrations, today you would have $11,733. However, if you had invested only during Democratic administrations you would now have $300,671. While this is true on a superficial level, it ignores a lot of stuff: inflation, the fact that the president can hardly be responsible for the performance of the stock market during his first few months, and dividends, which were much more important 80 years ago when there were lots of republican presidents. If you play with these assumptions, you find the difference is not very profound. If you include the effects of dividends and inflation, and start in 1897, you find your $10,000 turned into $156,000 under republicans, $217,000 under democrats, but $3,388,000 if you left it in for both. Having said that, it's hard to imagine that a presidency could end on a much worse note than this one - down 40% - or that a new presidency could start from such an easy position. It's hard to imagine we can go much further down. Similarly, by the way, Bill Clinton left the stock market at the top of a huge bubble - it's hard to imagine how any president could have done other than go down.
In any case, politicians certainly keep one eye on the market, and just love to claim credit when it goes well. Clinton adviser James Carvell said “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
Today the Treasury announced there will be no special deal for the GM / Chrysler merger. GM stock promptly sank 15%. Senators and Congressmen from six states are now lobbying furiously to get something done. This drama will continue to play out for at least another month.