There are many similarities that the stock market shares with the changing of the seasons.
In the same way that Spring, Summer, Fall and Winter trace the various weather cycles throughout the year, there are four separate quarters that make up the annual progression of the market.
People are different and everyone has at least one season they prefer over the rest, but when it comes to investing, the fourth quarter outshines them all.
October marks the beginning of the most profitable quarter of the yearly market cycle and things are already off to a good start. As I write this, U.S. stocks are mid-climb towards record highs!
Here’s why and where to look for some of these upcoming gains in the market.
We’re now just days into Q4 and the S&P 500 index has already increased by 18 points, passing the all-time high it closed at only a few months before.
But what’s driving this recent increase?
There are always a handful of factors that play into the fluctuations we often see around this time of year; however, in this case, the credit is due to a new trade deal between the United States, Canada and Mexico.
The agreement, known as the U.S.-Mexico-Canada Agreement or USMCA for short, effectively removes the threat of damaging auto tariffs and requires 75% of vehicle content to be made in North America, instead of 62.5%.
Without getting into all the details or the politics behind this new deal, just understand that automobile suppliers are the ones who are benefiting.
The auto industry is directly influenced by this activity and a significant increase in share prices is expected to follow.
In fact, we’ve already had a glimpse of these profits to come…
Tesla (TSLA) shares already surged close to 20% over the weekend, and other U.S. based car companies, such as Ford (F) and General Motors (GM), are following its lead.
But it doesn’t end there!
Martinrea International Inc. (MRETF) is up 11%, Magna International Inc. (MGA) gained a little over 4% and Linamar Corp. (LIMAF) rose close to 8% percent!
As you can see, each of these Canadian corporations have had their share of profits. The thing is, there is every indication that these valuations will continue to increase.
I encourage you to keep your eyes peeled as these auto industry competitors continue to follow this upward trajectory.
To say the least, this is a great start to the fourth quarter. Usually, you won’t see this type of traction until later on, towards the end of the year.
