September To Remember: Best 3rd Quarter For U.S. Stocks In 4yrs.; Best Investment Plays Heading Into Last Quarter Of 2017
The most doubted/’hated’ bull market that I can remember, just had the best September performance in four years; and, despite many a skeptic, shows no signs that it is on its last legs. Indeed, legendary investor and BlackStone’s Vice Chairman, Byron Wien told CNBC’s Trading Nation last week that he thought that this incredible bull run in stocks is far from over. Mr. Wien, who correctly saw a very good 2017 for U.S. equities — back in Dec. 2016/Jan. 2017 — thinks we have another two years to go in this bull run in stocks. As Stephanie Landsman wrote on CNBC’s September 26, 2017 blog-site, “investors may want to listen to Wien, who correctly forecast (back in Dec. 2016/Jan. 2017), that the S&P 500 would rise by 10 percent, to 2,500.” The index closed out September at 2,519 points.
Then of course, there are the ‘chicken little’s like former Reagan Office of Management and Budget Director (OMB) David Stockman, who this past week publicly ‘warned investors to get out of the casino [stock market]; and, said U.S. stocks were on the precipice of a 40 percent, to 70 percent drop. Mr. Stockman has been forecasting a major stock market correction for at least the past two years; and, probably three years. Had investors listened to him, they would have missed out on one of the greatest bull runs in the last decade or more. A broken clock is right twice a day. Yes, Mr. Stockman will be right at some point. Stocks do not move in a straight line and yes….we’re overdue for a correction. But, we’re heading into the fourth quarter and November – April are historically and traditionally, the best time to be invested in stocks.
Something else for the bulls and bears to keep in mind: “short sellers are back in force,” Vito Racanelli wrote in this weekend’s (October 1/2) Barron’s, which is also a bullish, contrarian indicator for stocks/investors. According to IHS Markit, a market data and research/analytics firm, “averaging shorting across the S&P 500 index constituents, stands at 2.7 percent, the highest level since before the 2016 presidential elections,” Mr. Racanelli wrote.
Of note, “since 1928, there have been 29 Septembers when the S&P 500 made a 12-month high, as we just did here in 2017. Following those 29 instances, the DOW and S&P 500 rose over 80 percent of the time in the fourth quarter, averaging a 3.7 percent increase,” said Doug Ramsey, Chief Investment Officer of the Leuthold Group, in an interview with Barron’s. “Better still,” Mr. Racanelli wrote, “15 of those 29 September price highs, were also accompanied by 12-month advance/decline line highs — as is the case now. Stocks increased an average of 5.9 percent, in the fourth quarter, in those 15 instances.”
Odds are, in my opinion, we’re going to end 2017 about 5 percent higher than where we closed September — on the S&P 500, and maybe +5 percent on the NASDAQ. With that in mind — what are the best places to invest heading into the end of 2017?
Best Places To Invest Heading Into End Of 2017
CNBC surveyed fund managers and investment analysts/rpros across Wall Street to get their best ideas on where to place one’s investment dollars in the fourth quarter of 2017. The top three sectors in order from one to three were: Financials, Technology, and Energy. FYI, according to Kensho Analytics, the technology sector in the U.S. has risen an average of 6.4 percent in the fourth quarter since 1989 — or the past 17 years.
According to Gene Munster, Co-Founder of Loup Ventures, and considered one of the top technology analysts on the street, the Top Q4 Trends/Themes in technology in Q4 will be: Crypto Currency; Availability of the iPhone X; With the LTE Watch; and, Tesla Model 3 production.
As far as the best places, fund managers and analysts picked the USA and Emerging Markets (EM), each garnering 36 percent of the vote, with the European Union garnering 21 percent; and, Japan at 7 percent.
As for me personally, I will stick with U.S. technology, especially bio-tech/pharma, artificial intelligence, and cyber security plays as my best bets. I ended September/3rd Quarter, sitting at a 30 percent year-to-date gain in the portfolio. But, we’ll see how I end the year. Good luck to all of you, whatever you do. And, always, do your own due diligence, homework, and understand your risk tolerance, time horizon, and sectors you are most comfortable/knowledgeable about. FYI, stocks that I currently own include: NVDA, BABA, and BIDU. V/R, RCP