Fall weather has finally arrived here in New Jersey and we head into the final stretch of the year in the financial markets.
- Last Quarter of the Year — Over the past 25 years (1992-2016), the S&P 500 stock index has gained an average of 4.9% (total return) over the final three months of the year. Twenty of the past 25 fourth quarters (80%) have produced a positive total return gain (source: BTN Research).
- Whenever the S&P 500 is positive for August and September, two of the worst months for stocks, the S&P 500 has risen for the remainder of the year 13 of 16 times, or 81% of the time (source: CFRA). August was flat and September was up this year.
- Investor sentiment remains neutral to negative, as you can see from this chart from AAII (American Assoc. of Individual Investors). This is a positive for stocks.
- However, October was when the stock market plunged in 2007, 1997 and 1987, so I remain cautious in the short-term.
- US final 2nd quarter Gross Domestic Product (GDP) was revised up to 3.1% based on solid consumer spending (+3.3%) and growth in business spending on equipment. The employment market remains stable, although likely to decline in the short-term as a result of the storms in Houston, Florida, and Puerto Rico.
- Rebuilding from the storms is expected to provide a boost to GDP in the fourth quarter.
- The global economy continues to show positive signs: China factories are growing at the fastest pace in 5 years, Japan business sentiment is the most upbeat in a decade, rapid globalization has companies such as IBM now having more employees overseas than in the US.
- Interest rates and inflation remain low, both in the US and globally.
- The economy, globally, remains stable to growing.
- Steady job growth and a positive stock market will encourage consumers to spend.
- Monetary policy (interest rates) remains accommodative globally.
- Consumer and corporate balance sheets remain in good shape, with a considerable amount of cash on the sidelines.
In summary, I expect both the economy and the financial markets to be stable to positive through the end of the year. However, I am anticipating a bit more volatility in stocks during October. I continue to monitor your portfolio and will let you know if any adjustments are warranted.
Feel free to call me if you have any questions.
Also, please share this report with anyone who you feel would benefit from the information.
October Calendar of Events (comments and additions for future months are always welcome)
- October is Breast Cancer Awareness and Domestic Violence Awareness month.
October 7th 1 year anniversary of purchasing our office building – we’d love to have you come for a visit – 141 W Main Street Rockaway
October 9th Columbus Day
October 15th Medicare open enrollment thru 12/7/17 – you can switch from original Medicare to Medicare Advantage, or vice versa. You can also switch from one Medicare Advantage plan to another, or from one Medicare Part D (prescription drug) plan to another, or drop your Medicare Part D coverage altogether. Please call us if you have any questions about your options.
October 22nd National Nut Day – only in America can you have a day to celebrate nuts. Ps: peanuts are legumes, not nuts!
October 31st Halloween