The S&P 500, international stocks and cannabis stocks all finished the third quarter in the green. Although I am expecting more volatility through the US election, I’m also expecting a strong rally in the fourth quarter to give the S&P 500 an 8% to 10% gain in 2016.
Greetings Friends,
The third quarter ended last week.
Although the action was a bit bumpy, the S&P 500, international stocks and cannabis stocks all finished in the green to add to their yearly gains. Here’s a snap shot of global stock returns in the third quarter.
- The S&P 500: +1.12%
- The Vanguard Global Stock Market: +3.47%
- iShares Emerging Market: +9.25%
These gains add to the nice 2016 stocks are having.
- The S&P 500: +5.48%
- The Vanguard Global Stock Market: +4.96%
- iShares Emerging Market: +17.09%
As you can see, emerging markets are having a good year. That’s good to see because they have been a bit weak for the last few years. Hopefully this signals a longer term reversal because I’m a believer that emerging markets will beat the S&P 500 in the long run.
Looking Forward, here’s how I think the fourth quarter will play out and how I am advising my clients.
In the short run, I expect to see higher volatility as the U.S presidential election moves into the home stretch.
I see Hillary as being better for U.S. stocks in the short run and maybe even the long run. If she wins, I expect to see the S&P 500 get a nice boost right away. Mostly because she is the establishment candidate and more likely to let the Fed run wild.
If Trump wins, I don’t have a prediction for how stocks will respond. I could see it being good, bad or nothing for U.S. stocks.
My prediction on the outcome? Hillary wins by a two to three percent margin.
Key Short-Term Takeaway If Hillary wins, or polls start showing she will win, I am expecting the S&P 500 to start advancing again back to its all-time high.
Every Investor Must Understand this Profitable Seasonal Trend
Beyond the U.S. presidential election, there is another important seasonal trend that every investor must know about.
The fourth quarter is when the S&P 500 enters its best 6-month cycle of the year.
Research shows that since 1950, the S&P 500 has gained an average of 7.1% between November and April compared to an average gain of just 1.4% between May and October.
This pattern doesn’t happen every year. But this is an important seasonal trend that me and my clients use to figure out when to send big blocks of cash into the market.
Key Long-Term Takeaway: I am expecting a Hillary victory and the seasonal trend to power the S&P 500 into an 8% to 10% gain in 2016. If you have too much cash in your account, the next 4-6 weeks could be a great time to deploy.
Cannabis Stocks are Killing it in 2016
Speaking of elections – American won’t just be voting on a new president come November. They will also be voting on decriminalizing and regulating cannabis consumption.
Five states will be voting to legalize recreational cannabis. One of those states is California, the largest cannabis market in the world. Another four states are voting on adapting medical cannabis programs.
Cannabis stocks have already been having an incredible year.
We’re seeing huge gains and momentum into the election. Check out the 2016 gains for a few of our favorite cannabis stocks.
Terra Tech (OTC: TRTC): +333%
Aphria (TSO: APH.V) +178%
GW Pharmaceuticals (NYSE: GWPH): +89%
Despite the impressive gains, this election could be a major catalyst for the industry and cannabis stocks.
If California and a few other states vote yes these cannabis stocks could get a big boost.
I’m excited to see how it all plays out.
That’s it for now. Ill be back in a few weeks with a few new updates on the US presidential election.
Your Investment Partner,
Mike
Disclosure: I own shares of Canopy Growth Corp, Terra Tech and GW Pharmaceuticals.
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
