Fourth quarters can be nerve racking – they’re a time when it feels like anything can, and does, happen (football fans know this feeling well). But for year’s end, the stock market (traditionally) rockets away in earnings from previous quarters. Tack onto that tradition that since 1925, the S&P 500 has risen in 19 of 22 midterm-election-year fourth quarters. While increases for mid-term election fourth quarters certainly vary – sometimes 2% up, sometimes 22% – those numbers are still going in a favorable direction.
In fact, Q4 of 2014 is already upholding the status quo with S&P hitting record highs, and market professionals everywhere from Forbes to CNBC are predicting that Q4 in 2014 is shaping up to look darn good.
US Bank’s Jeffery Kravetz is laying down his cards on the subject, too: “We’re going to have a good rest of the year,” he said in a phone call. “We’re going to trend higher. There may be a little bit of volatility just because of all these geopolitical events. But it’s a very favorable environment here in the U.S.”
One reason for traditionally strong fourth quarters is they fall right smack over the holiday season. With Halloween, Thanksgiving, Hanukah, and Christmas come considerable cash out of the pockets of consumers and into the economy. Naturally, businesses support this cash-out process with annual sales like Black Friday, and then post-holiday savings, too.
It’s important to remember nothing is ever certain, of course. Geopolitics, natural disasters, and other factors can shake up the market in the blink of an eye, which is why it’s important to be smart in your investments. I say it to my kids, and I’ll say it to you: “Make good choices.”
If you want to make sure you’re making the best Q4 investments, please contact us today!