THE OCTOBER EFFECT

October has witnessed three significant crashes in the history of the MSCI World Index: Firstly the Wall Street crash of 1929, then in 1987 and 2008.

In October 1987, global stocks dropped by -17.0%, and in October 2008, they fell by -18.9%.

This has become known as "The October Effect"

Some analysts are predicting it may soon happen again

From the panic of 1907 to Black Tuesday of 1929 and, more recently, Black Monday of 1987, the month of October has been ripe with financial crises and market crashes over time. And that's led The China Dolls will think positively and continue to invest.

BAE: This is our highest value share holding and we are showing a 115% paper profit.

Is it time to lock in some of the profit? We have been deliberating this point for some months now, but the share continues on its upward path. It has a price earnings ratio of 26, considered high by some. The share price hit 2060 at the beginning of October but has fallen back down to 1853 at the time of writing. That is still 43% up over the past year.

We are holding.

COSTAIN: Update: Costain, the infrastructure solutions company, has been selected by Sellafield for a significant role on its long-term Infrastructure Delivery Partnership (IDP).

The total value of Sellafield’s IDP is worth up to £2.9bn, split into three lots. Costain has been confirmed as Utilities Delivery Partner (Lot 3), worth up to £1bn to the company. The contract consists of an initial term of nine years with an option to extend by a further six years, either in a single extension or multiple smaller extensions.

The share price has risen 123% over the past 5 years. The China Dolls are showing a 64% paper profit. Up from 43% last month. We are pleased we held on to this one.

Price at the time of writing: 154.5p

CRODA: Croda International saw its earnings per share decline at a compound rate of 42% per year, over the last three years. In comparison the 25% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. The share price has risen 9.5% over the last month.

Croda was one of our first share purchases, 25 years ago. We considered it our "solid and safe share". So we have been disappointed to see it fall from favour.

JP Morgan has reiterated its 'overweight' rating on Croda International following strong third-quarter numbers from the speciality chemicals group.

The bank flagged a number of reasons for its "bullish view".

It said: "The earnings downgrade cycle is largely behind us, with consensus estimates likely to remain stable even as much of the sector faces further cuts; improved execution in OSG delivery, operating leverage and self-help cost actions; [and] the market's pessimism on business fundamentals, particularly regarding competitive pressures and portfolio commoditisation, seems excessive to us."

We are holding this for now. Price at the time of writing 2965p

LEGAL AND GENERAL: L & G has recently announced the completion of two buy-ins totalling £4.6 billion with pension schemes sponsored by Ford Motor Company Limited. This includes the Ford Hourly Paid Contributory Pension Fund and the Ford Salaried Contributory Pension Fund.

This is a relatively new share purchase to our portfolio. We are showing a very small 3% paper profit at the moment. But a strong, stable company and we are holding.

Price at the time of writing 243p.

ROLLS ROYCE:

Strong earnings & new contracts: The surge in demand for jet engines and defence equipment has fuelled the rally. Underlying profit for the first half of 2025 increased by 50% to £1.7 billion, leading Rolls-Royce to raise its full-year forecast and pushing shares to record highs. Significant achievements – from a £9 billion nuclear submarine reactor contract to being selected for Britain’s first small modular reactors (SMRs) with £2.5 billion government support have strengthened the company’s outlook.

Rolls Royce has a high price earnings ratio of over 43! However we are showing an 18% paper profit. Share price at the time of writing 1118p. A hold

DECISIONS: We had a little money to spend:

So invested £500 into each of the following shares:

ITM POWER: A UK-based company that designs and manufactures electrolyzers, which are devices that use proton exchange membrane (PEM) technology to produce "green" hydrogen from renewable electricity and water. The share price has risen 152% over the past 6 months.

Sylvania Platinium: is a company that produces platinum group metals (PGMs) like platinum, palladium, and rhodium from its operations in South Africa. Its core business is reprocessing PGM-rich chrome tailings and other mine dumps to extract these metals. The company also has mining rights for PGM projects. The share price has risen 75% over the past year.

DISCLAIMER

The China Dolls is a group of private individuals who meet regularly to discuss investment strategy and make investments based on the collective opinion of the the group.

The China Dolls is not in the business of offering any form of advice on investing or other financial matters.

The content of this blog is not to be considered an inducement to trade as we trade and is offered for illustrative purposes only.

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