This story was originally published here.
We know it gets cold in the winter, hot in the summer.
We know that flowers bloom in spring, and leaves turn brown in fall.
Every year, we know the seasonal trends that will come up in a couple of months.
But if we are trying to predict the exact temperature a month from now, it’s near impossible.
Instead, we focus on the trends themselves.
It’s summer now, so we know to expect temperatures to cool off heading into the end of the year. Who knows exactly how low the temperature will fall? We don’t care.
I know the slopes are still going to get cold enough for snow, so we book ski trips. I love it when they call for a warm winter or talk about temps rising, that’s when I can get nice discounts.
Just knowing the trends of weather, we can benefit from the hype and worry over short-term temperature changes.
I look at investing the same way.
We don’t have to know exactly where a stock will trade at two or three months from now. As long as I know what seasonal trend to expect, we can profit from it.
Seasonal trends occur in the stock market just like they do in weather, and they are still called seasonal trends. These are certain times of the year where certain sectors rise or fall like clockwork.
The trends even highlight when you can expect the biggest pullbacks in the market, like the sharp drops we are seeing today.
But after these drops, the seasonal trends point to even bigger gains for certain sectors.
And right now, we are heading into one of the most popular seasonal trends — rising consumer discretionary stocks.
Editor's Note: Click here to keep reading.
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