Holiday season is coming: what does that mean to investors? - November 06, 2019

Holiday season is coming: what does that mean to investors?

The end of the year, especially November and December are usually strong months for the economy. During the Western holiday season, people tend to spend more than usual. Since we’re talking about several hundred million people, this extra expenditure influences the global economy. There are several things we can expect this year too.

Markets usually fly at the end of the year, which is connected to the holiday season in Western countries. During the period between November-December people tend to spend more. This has an important effect on global economy as well, so it’s a great opportunity for investors too.

Stocks may fly

Historically speaking, during this period, stocks usually perform strongly. In the recent past there was only one exception to this “rule”. Last year we saw a huge sell-off on the markets during Christmas Eve, but after that S&P 500 had its best kick-off in 30 years in 2019. This year we’re not expecting a sell-off like this, but even if something similar happens, a bounce back is also possible.

Source: https://commodityseasonality.com/

Many experts believe that the US economy is healthy in general, and able to perform well on a longer term. Particularly if consumer spending remains higher, which is the case now. During the holiday season this might be especially true.

Keep an eye on gold

Looking closely at precious metals is also a good idea at the end of the year. Historically speaking, gold for example performs less good during this period, so lower prices can be expected. This doesn’t mean that investors should sell their gold, on the contrary. The year’s end is a good buying point that people can benefit from.

Source: https://commodityseasonality.com/

Especially if we look at the bigger picture: in the last years demand for gold is skyrocketing. This year gold hit a 6-year record, and several countries (and investors) are betting on the precious metal. Global gold reserves are also rising, and central banks will probably just buy more and more gold in the upcoming years. This also means that gold might be a great idea to buy during this period.

Keep calm and diversify

As a last advice we can only repeat ourselves that investors should remain calm during this period. Prices may fluctuate, yes, but that doesn’t necessarily mean that there are problems. What’s more, stock prices tend to go up on medium and long-term, and emotional investing has a huge price tag.

Diversification is also essential when investing. Since gold prices are expected to be lower during these months, it’s a good idea to rebuy them. This also helps having a better diversified portfolio because having more than one kind of instrument isimportant, even if one equity performs better than the other.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.