I have tried to give you different frameworks to help you play the market. Our framework of an election I hope you found helpful. Now I will give my take on profit seasons and ways to do to make good investments.
Here you see the post US Election market. My general suggestion was rallies post election and it seems to have worked out all right.
Now I propose profit seasons to be another framework to play markets.
In my book the setting of the profit season starts as soon as the Quarter ends. Sometimes stocks starts running all from the start of the new Quarter and up till the Earnings day. Probably cause of high earnings expectations. I propose buying into such stocks, buy in when they start to run.
What else can I tell you about the profit season. According to my sources around two out of three earnings beat expectations. This from time to time creates what I will call a profit season rally. To be aware of potential profit season rallies helpful in the long run.
Old knowledge like the JAJ is something to make use of. This tells us the profit season months of January, April & July the best performing months. Probably caused by the profit season rally mentioned above.
Often I have seen the profit season ending up in a market sell off. You can get a rally and as the season ends investors take profits, you can even get a small correction.
This a framework to help you play the profit season. It has helped me through the years analyzing both the broader market & individual stocks.