“Unlocking the potential of Bitcoin strategies and underdog stocks in October: Exploring the untapped opportunities for savvy investors to make a bold move towards financial success.”
Seasonal rotations into bitcoin ETFs and stocks like Grayscale Bitcoin Trust (GBTC) and Super Micro Computer (SMCI) make it a great time to put your portfolio through what Jeffrey Hirsch, editor of the Stock Trader’s Almanac, calls a “sober October.”
“Most of those bullish seasonal sector periods begin in October,” Hirsch said. He sees sector rotation opening up chances for investors to get exposure to bitcoin strategies and underdog stocks.
Hirsch says the October seasonality comes right before year-end rallies and after the hot summer markets have cooled down. The rotation is not an exact science and can vary each year, says Hirsch. But because events like the presidential election are fixed into four-year cycles, the market usually maintains its tempo for these rotations.
Hirsch says he typically sees a seasonal Q4 rally for bitcoin, and has been particularly interested in Grayscale Bitcoin Trust. The ETF is very well correlated with the underlying cryptocurrency and works as a bitcoin strategy, says Hirsch.
Hirsch says following seasonality trends also help with “cleaning house,” getting rid of underperforming stocks in one’s portfolio. The move can help boost a portfolio’s performance in aggregate, and even highlight stocks set to perform well. Hirsch first bought Super Micro Computer, the artificial intelligence-focused server and storage maker, as part of an initial basket of stocks. The company stood out by surviving repeated portfolio cullings.
When the right season approaches, Hirsch says he also looks for underfollowed stocks by sifting through the names with tools like IBD’s MarketSmith and other charting software. “We’re looking for stocks that are underfollowed,” said Hirsch. He looks at stocks with clear growth patterns, accelerations in earnings and revenue and healthy metrics like good price-to-earnings ratios and cash flow.
For similar stocks and bitcoin strategies, Hirsch prefers the underdogs, names that analysts tend to overlook despite strong fundamentals. “All things being equal, we’re going to look at ratings, and we don’t care what the analysts are saying,” said Hirsch. “If the two stocks are equal, and one is followed by four or five analysts and the other is followed by 20, we’re going to go for the one followed by less analysts.”
Ignoring the story behind the stock can sometimes yield surprising results. “Years ago, we ended up picking up on Scott’s Miracle-Gro (SMG),” said Hirsch. As it turned out, the company had just acquired a hydroponics company popular with the cannabis industry — right as the cannabis craze broke out in 2018. “They were making money with that purchase,” said Hirsch.
Seasonal rotations and following underdog stocks and bitcoin strategies can be a profitable approach for investors looking to optimize their portfolios. By taking advantage of the opportunities presented in October, investors can position themselves for potential year-end rallies and capitalize on market trends.
