The business world and as a result the stock market tend to have cyclical performance patterns based things like the season and weather. In order to be a good investor, it’s important to keep your eye on the business world and trends, whether they’re trends that happen every season or annually, or they’re related to specific events, such as political changes.
Knowing the business world can make for a good investor, but even if you’re just getting started, you can use tools like a stock charts screener to get a feel for how individual businesses are performing currently, or what their future trajectory might be.
As we’re about to head into fall, it’s a good time to take a general look at those businesses and industries that tend to perform well as the weather cools.
Here’s what to know this fall.
Energy
The energy sector has been one of the worst-performing in 2017, but as we head into September, it may be time to take a look at this area. While it’s been underperforming, it’s not necessarily undervalued. Right now the energy sector actually appears to be at a fair value level, so you may be able to find some good opportunities and bargain buys.
Of course, not everyone is saying buy energy, but for a lot of analysts, this area is one that is poised to see some upcoming strength. The price of crude oil has gotten to a stable level, and there are even some investment research groups that are saying energy may be one of the sectors that perform the best in 2018, although only time will tell.
It’s also important to realize from a seasonal perspective, the demand for natural gas and oil will go up with lower temperatures. For example, the majority of natural gas produced during the warmer weather months is set aside until the demand goes up in the colder months.
Sector Rotation
Some investors might be interested in the concept of the sector rotation strategy. This isn’t exactly about seasonal business trends, but it is more about looking at varying times of strength and weakness in markets.
If you’re considering sector rotation this autumn, you’ll be taking a different approach than buying and holding, but historically sector rotation outperforms buy-and-hold.
Consumer Spending
Finally, there are obvious risks particularly for less experienced investors when it comes to one business or even one sector, but something that can work well particularly when the weather cools off is to look at something like an ETF based on consumer spending.
Once summer vacations end and people are back to their normal routines, they tend to spend more. Consumer discretionary stocks are risky, but they can be a good opportunity too. It’s important to remember these options aren’t based on spending on necessities, but instead rely on consumer spending on those extra things. You can go this route with individual stocks, such as by looking at something like Starbucks, but an ETF or similar investment vehicle may be the wiser option.
….
