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October Market Perspectives and WYNTK

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October 10, 2023

As September came to a close, every major US index ETF in Bespoke Asset Management’s Trend Analyzer tool was in extreme oversold territory.  Ironically, the last time we saw this happen was exactly a year ago on 9/27/22. There's just something about September trading or the fact that historically this is a tough stretch for investors. Look at recent history for example:

The good news is September is over…… Q4 is historically a great time to be invested!

If we let history be our guide, since 1950, when September is negative you have an October that is 50% better on average in comparison to its historical performance.

October kicks off what has historically been the best four-month period of the year for stocks with the S&P 500 averaging gains of over 1% in each month from October through January. October is also known as the month of market bottoms. Of the 60 market corrections (declines of 10%+ without a 10%+ rally in between) since 1945, 18 of them have bottomed during October.

As a gentle reminder during these times, when markets tumble, the first instinct many have is to run for the exits with the intention of reinvesting when things stabilize. But the data shows this may not be the best decision – assuming the goal is to recoup losses as quickly as possible. Contact my office if you want me to send you a couple of interesting case studies in regards.

In Summary:

·       After an optimistic start to the third quarter, stock markets reversed course in a sentiment sparked September, concerned by the steep rise in 10-year yields, which have hit a new high since 2007 in both Canada and the United States.

·       In saying that, year-to-date we are still nicely in positive territory as the  widely preferred measure for global equities, MSCI ACWI, is +10.49% and remains on track for the recovery we envisioned as the year commenced.

·       According to the Federal Reserve's latest projections, there's no need to worry too much, as the Central Bank seems to be counting on a "soft landing" scenario. At first glance, this sounds optimistic, but when it comes to the U.S. economy, skeptics have been confounded up to now. Is this an indication that this time is different?

·       All economic cycles have their peculiarities. This time, it's the ability of consumers to continue spending with little restraint despite inflation and rate hikes that stand out. However, while the accumulation of excess savings likely explains much of this phenomenon, this trend does not appear to be sustainable.

·       While it is impossible to predict when the rally resumes, it is sensible to believe it should have ample fuel when it does. US economic growth remains resilient which is a far cry from the recession fears every talking head on Wall Street pencilled in as the year began.

·       Fundamentally, things are going reasonably well considering all the noise in the background. While all these fears deserve attention, most of them are old fears investors have had to digest before, in some cases for years. This is a bull-market hallmark and a normal part of stock’s climbing the wall of worry.

Please click on the attached ‘October Market Perspectives’ for a more in-depth breakdown.

Finally, I sincerely appreciate you taking time out of your busy day to stay informed and please understand I am here for you every step along the way in your investment journey. Should you have any questions regarding your portfolio or any aspect of your planning, please do not hesitate to contact my office as creating well educated and informed investors continues to be the hallmark of my practice.

Thanks for Reading. AP

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