The third-quarter ended last week. It was one of the bumpier rides the stock market has seen in years.
At its lowest point, the S&P 500 was down about 12% from its all-time high. Any decline of 10% or more is a classified as a correction. A decline of 20% or more is classified as a bear market.
The last time the S&P entered a correction was four years ago in September of 2011. So it’s been a while since investors have seen any weakness in the market.
Despite the bumpy quarter, most global stock markets are in position to deliver positive gains on the year.
Here’s a rundown on total returns (price gains + dividends) from different regions of the world so far in 2015.
- Europe (VGK): +1%
- Vanguard All World ETF (VT): -2%
- S&P 500 (SPY): -2%
- iShares Asia 50 (AIA): -4%
- Emerging Markets (EEM): -9%
- South America (ILF): -24%
Looking forward, there are two important seasonal trends that tell me the S&P is going to rally into the end of the year and close 2015 in the green.
This first is the VIX. The VIX, also known as the misery index, measures market volatility. When the VIX is rising, stocks are falling. When the VIX is declining, stocks are rising.
What you can see in the chart below, August, September and October and seasonally the most volatility months of the year for the stocks. Take a look.
The stock market is now past its most volatile season of the year in relatively good shape – a factor that bodes well for performance for the rest of the year.
The second seasonal trend is just as important as the VIX.
According to the Stock Trader’s Almanac, November 1 through April 30 has historically been the strongest six months of the year for U.S. stocks.
These studies have found that on average, the Dow Jones Industrial Average has risen 7.5% from November 1 through April 30 since 1950, versus 0.3% rise during the other six Months. Take a look below.
These seasonal trends tell me two things. The stock market is going to rally into the end of the year. And if you have any cash on the sidelines, now is the time to be deploying.
That’s exactly what I’ve been up to personally and with many of my clients.
The Vodicka Group is Launching a Cannabis Fund in 2016
Speaking of deployments, I wanted to share some company news with everyone.
In 2016 my company is launching a new investment fund that will be focused on the marijuana industry. Basically, think of it as a mutual fund for cannabis stocks.
Cannabis was the fastest growing industry in the U.S. in 2014. With more states legalizing medical and recreational marijuana, that trend is doing nothing but accelerating.
This fund will be an excellent way for my clients to invest in this bullish trend.
Now, let me make this clear. Cannabis stocks are super risky and super volatile. So I recommend only investing money into this fund that you can lose without a second thought.
I will be sending out another group email and contacting my clients individually to discuss the fund. But I want to make sure everyone knows about this new service ahead of time so you can plan accordingly.
Third-Quarter Reports are Being Sent Out
Other than that I am currently in the process of sending out third-quarter performance reports. In the meantime, if anyone has questions you can email me or just give me a buzz.
Your Investment Partner,
Mike
