The third quarter of 2018 is history. Despite the usual pessimism from the financial media, it was an awesome quarter for US and global stocks.
- The S&P 500 was up 7.2% – its best quarterly return since 2013.
- The Dow Jones Industrial Average was up 9%.
- The tech heavy NASDAQ was up 7.1%.
Global stocks were strong too.
- The Vanguard Global Stock ETF (VT) was up 5%.
- Emerging Markets (EEM) lagged developed markets – basically neutral on the quarter.
Some of our favorite individual stocks were up even more.
- Match.com (MTCH) was up 48%.
- Apple (AAPL) was up 22%.
- Amazon (AMZN) was up 18%.
- Visa, Inc. (V) was up 13%.
As you can see, it was another great quarter for US and global stocks.
I am Expecting a Strong Fourth Quarter and More Gains Ahead
Looking forward I am expecting more of the same. I am expecting the S&P 500 to rally higher in the fourth quarter and close 2018 trading at a new all-time high.
a strong fourth quarter and more gains because of four key factors.
#1 Global and US GDP are strong: the global and US economies are growing at the fastest rate in a decade.
Global GDP is set to clock in at 3.1% in 2018, its best pace of growth since before the financial crisis in 2008.
US GDP expanded 4.2 % in the second quarter, the best growth in ten years.
US GDP is on pace to expand 3.1% in 2018, the first time GDP will crack the 3% threshold in ten years.
#2 S&P 500 earnings set to hit all-time high: S&P 500 earnings have been surging since the first quarter of 2017 and are set to hit a new all-time high in the fourth quarter and a series of new all-time highs throughout 2019.
Take a look at the S&P 500 earnings growth in the chart below from Zacks Investment Research.
#3 S&P 500 moving into strongest season: US stocks are moving into the strongest six months of the year.
The period between November and May is the strongest six months of the year for the stock market.
This well documented seasonal pattern should provide US and global stocks with some strong tailwinds in the next six months.
Take a look below.
#4 S&P 500 has upward momentum: US stocks are in a bull market, the trend and momentum are still pointing higher.
Here’s how to Proceed in the Fourth Quarter
The US stock market is quietly having another great year – up almost 12% when including dividend payments.
My plan is to stay aggressive. That means two things:
#1 keeping cash deployed into stocks.
#2 quickly deploying new cash deposits and contributions.
That’s all for now. I’ll be back in a few weeks with another update.
Your Investment Partner,
Mike
This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.
