Bet on Most Valuable Company is "Wise" ?
It’s the beginning of a new trading month - September 2024.
It is a “known” fact that historically, the month of September is one of the worst months in US trading calendar.
A quick Google reveals:
From 1928 thru 2021, the S&P 500 index has averaged a -1.0% decline during the month of September.
This is an average exhibited over many years.
Wn-ratio (percentage of years with positive returns) for September is around 44%., as mentioned in my yesterday’s post (click here ! to read and help to Repost ok - thanks)
To qualify - September is not the worst month; not the best either.
The September Effect is a market anomaly and not related to any particular market event or news.
In recent years, the effect seemed to have dissipated. but still leave a bitter aftertaste.
Other factors contributing towards September’s dismal performances historically includes:
Economic indicators.
Geopolitical events.
Corporate earnings.
Quadruple witching.
Presidential Election Year.
To further complicate matters, if the element of “US presidential election” is thrown into the mix, above argument about S&P 500’s September performances, takes on a slightly different meaning.
Most recent 2 presidential elections:
Year 2015 - where ex President Trump won against Hilary Clinton.
Year 2019 - where current President Joe Biden won against ex President Trump.
S&P 500 Q4 Performances.
*note: the grey line marks the end of the month; not the beginning.
It is inconclusive that during US presidential election year, the S&P 500‘s September performances fared worse than its preceding month of August.
For Q4 2015, the S&P 500:
Fell in August & September 2015.
Charted higher only in October.
Plateau in November before trending down in December & January.
For Q4 2019, the S&P 500:
Trended lower in August 2019.
Recovered in September thru to December.
Plateau in January before beginning its descend;.
Million Dollar Question.
Will it be a repeat performance for the S&P 500 index this Q4 2024?
What is known so far: (see above)
The S&P 500 has been trending higher since May 2015.
On Friday, last trading day 30 Aug 2024, it closed off the month on a high.
It was the 4th month where the index closed higher.
Based on (a) Sampling theory and (b) Inference, it is fairly “safe” to assume that September 2024 should continue to rise higher. Agree ?
Assuming the postulation is accurate, the next question is which stock/s will be the “Best Bet/s”.
World's Top 50 - Most Valuable Companies
Will the strategy “invest in the most valuable companies” be sufficiently foolproof? (see above)
Best In Breed.
The “best” stock from each sector would be:
Technology - $Apple(AAPL)$ $3.5 trillion.
Conglomerate - $Berkshire Hathaway(BRK.B)$ . $980 billion.
Financial Services - $JPMorgan Chase(JPM)$ $. $824 billion.
Automotive - $Tesla Motors(TSLA)$ $. $681 billion.
Energy - $Exxon Mobil(XOM)$. $528 billion.
Technology - $Apple(AAPL)$ $3.5 trillion.
Healthcare - $Eli Lilly(LLY)$. $856 billion.
Consumer Goods/Retail - $Wal-Mart(WMT)$ . $612 billion.
To find out if this is a good strategy, see below.
Greek philosopher Heraclitus is credited with saying, "In life, change is the only constant".
Although he lived thousands of years ago, this quote is still valid and relevant today, even in the business world.
In past 40 years, the business and investing world completely transform, resulting in a changing of the guard of the world's biggest publicly traded companies (by revenue). (see below)
In 1985, the dominant sectors were:
Energy.
Automobile.
Technology stock, IBM was the leading tech company.
Cue to 2024,
Most noticeable in today's biggest companies is the rise of Retail & Technology.
$Amazon.com(AMZN)$ is at #2 position (for Retail).
Energy continues to be a favourite due to global dependence.
Consumers prefer “one-stop-shop” kind of companies like Walmart & Amazon.
$Wal-Mart(WMT)$ has a stronghold on the brick-and-mortar business, while Amazon has revolutionized e-Commerce.
My viewpoints: (mine only)
It is a challenging task and a marathon, when it comes to investing.
The stock that is in “demand” may become a stock of the past, in the future.
This means while investing in blue-chip stocks with a long-term goal / mentality, (1) periodic review and (2) consistent read-up are “must do”.
When investing in blue-chip stock, a consolation is although it might not be as popular in the future, they are more likely to survive than small businesses.
$IBM(IBM)$ is a salient example (see above).
Similarly, $Ford(F)$ another 1985 top US stock has been displaced by $Tesla Motors(TSLA)$ by 2024.
Will the “World’s Top 50 Most valuable companies” and “5 Biggest companies in 2024” — still be leading the pact 40 years on? Only time will tell.
One thing remains certain, though: Change is all but inevitable.
Must Read: Click on below titles to access. Give a like & help to repost ok. Thanks.
Do you think investing in blue-chip stocks (although expensive per share) is a wise strategy?
Do you think the Top 50 Most Valuable companies will remain in the top in next 10 years?
If you find this post interesting, give it wings! ️ Repost and share the insights ?
Do consider “Follow me” and get firsthand read of my daily new post. Thank you.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!!