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October Shock in Equity Markets

October Shock in Equity Markets

It is important to note that we have been lucky each September to November for several years now, and this year is no exception. Taking risk off the table to lock in profit, and rotating to stocks in new themes, interests me a lot for October.

While many market participants are now focusing on US-China trade talks, the Trump impeachment saga, and other issues in the news, it makes sense to look closely at historical patterns in October as this month has delivered shockingly high volatility. As such, it makes sense to reduce positions by 30 percent or more to lock in gains in S&P 500, Kospi and Nikkei 225.

We liked Nikkei 225 at 20,200 and after enjoying a powerful rally over the past two months, are in reduction mode. Names like Sony, TDK, Hitachi, Kyocera, Subaru, Toyota and small caps, are of course interesting but the idea of rotation could allow us to enjoy other themes. Subaru to Suzuki, for example. More on this topic in the coming weeks.

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