U.S. small-cap stocks have been notably weak recently and I believe some of the market volatility is due to y the Federal Reserve’s conservative posture with respect to interest rates and the cutting back of bond buying activities.
Although October has a bad reputation with investors, since 1950, markets often improve between the third week of October through April the following year.
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Based on these historical trends, this may be a good time to invest in my opinion.
Gas pump relief
I continue to be overweight stocks versus bonds because I believe most of the slowdown in economic activity has passed as lower energy prices provide consumer relief at the gas pump.
Car buying and home purchases remain strong and though I have no way of knowing for sure this may help the markets next year.
Looking forward, I continue to believe third quarter earnings will be solid and may be a catalyst to move the markets higher before the end of 2014.
My investment approach with the Covestor Fundamental Growth portfolio is to buy companies with consistent earning power, high return-on-equity while employing little or no long-term debt and to purchase at reasonable prices.
I have a system that filters thousands of stocks on a weekly basis using the Sparrow multi-point checklist that screens the highest quality companies, which are then reviewed and considered for purchase in the portfolio.
Disclaimer: All investments involve risk and various investment strategies will not always be profitable. Past performance does not guarantee future results.
The post Why October may present a buying opportunity for stocks appeared first on Smarter InvestingCovestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures.
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