“The best trading period” for US stocks starts today, says Goldman

“Today starts the best trading period of Q4 for US equities with data going back to 1928,” writes Scott Rubner, managing director for global markets at Goldman Sachs.

Since 1928, the median return from now through year-end is 5.2% for the S&P 500. Since 1985, the Nasdaq 100 has tended to be up double-digits over the same stretch.

Conventional wisdom on Wall Street, per Rubner, is that stocks will retreat after next Tuesday’s election, but he’s more optimistic.

“I think that the US election will be a clearing event for risk assets, and re-risking may happen quickly (and out of favor sectors and themes that are under-owned),” he writes.

Starting now, activity of the bigger sellers of equities (mutual and pension funds) will die down, while a huge buyer — companies repurchasing their own shares — will begin to return in earnest as the heavy week of earnings announcements plays out.

Rubner previously flagged that Corporate America has already authorized a record $1 trillion in share buybacks so far in 2024, and November tends to be the busiest month for executing these repurchases.

Generally, there’s a lot of scope for money to rotate out of cash into stocks, he adds.