So far, November has been a fantastic month for ASX shares and the S&P/ASX 200 Index (ASX: XJO). Since the start of the penultimate month of 2023, the ASX 200 has gained around 3% and has risen every single trading day bar one. Even today, the index tentatively looks to be on track for another positive session. It doesn't exactly look like the start of a stock market crash.
But despite this positive start to the month for the Australian share market, memories of the rough September and October we've just endured are probably still raw for many ASX investors. The ASX 200 lost 3.5% of its value over September alone.
When added to the 3.8% loss that October brought, it ended up being two of the worst consecutive months for ASX shares in quite a long time.
With both September and October showing pain on ASX investors, many might be wondering whether November's strong start is just a cruel trick of the markets, and if we might be heading for a third month of losses in a row.
So what's the likelihood of a stock market crash this November?
Will we see an ASX stock market crash this November?
Well, it's looking less and less likely by the day. At the end of last month, the ASX 200 entered official correction territory. A correction is defined by a fall of 10% or greater than a recent high. Since the ASX had its 2023 peak back in February and subsequently fell around 10.4% by 30 October, it fulfilled this criteria.
However, a stock market crash is defined by a fall of 20% or more from the most recent high. This would mean that the ASX 200 would have to lose another 10.6% or so from its 30 October lows, or more than 13% from current levels, over the rest of this month to fulfil this requirement.
Objectively, a market crash seems unlikely, as it would represent the worst month for the ASX 200 since the COVID crash of 2020.
But nothing is impossible on the markets, and we can never rule anything out. The already dire situation in the Middle East could well get worse from here. If it does, and oil prices dramatically spike, it could well see ASX shares lose this kind of value.
I'm not trying to fearmonger here. Hopefully, things on the geopolitical world stage improve going forward. But I am arguing that we can never take anything for granted on the markets. We should always hope for the best, but be ready for the worst.
No one knows what's next for the stock market, be that tomorrow, next week or next month.
There have been plenty of black swan events that spark a stock market crash before, and there will undoubtedly be many more in the future. And the whole premise of a black swan event is that no one can see it coming.
But even if, against the odds, we do have a catastrophic end to November for ASX shares, investors shouldn't be afraid of what might happen on the markets. History tells us that, time and time again, stock market crashes are opportunities to buy up our favourite ASX shares at bargain basement prices.
That's what Warren Buffett has always done, and that's what any investor who understands how the stock market works will attempt to do.