Back to school season is in full swing. If you’re in school, have kids who are or just want to stay current with all of your investments, this is a prime time for some particular strategies. Back to school sales are major enough in the country that they can cause significant change in certain stock sectors, so take a look at what you need to consider.
Consumer Staples
This is the official name for office supplies. Stores like Officemax and, well, Staples usually see their best profits in the months of July and August. From pens and paper to new computers, and even desks and furniture, their entire inventories appeal to the school demographics.
That means that any investments into this industry should be very short-term, as the stores are still typically struggling the rest of the year. As for 2016, you’re better served leaving them alone, as the prime time of opportunity has already passed. Keep an eye out for next year’s back to school cycle if you want to try this route.
Electronics
There is definitely crossover between electronics and consumer staples, but stores that avoid the latter are the real focus in this case. Computer and electronic sales always spike in July and August, but unlike pens and paper these sales are sustained by the Christmas shopping season.
Since retail has been rebounding across the country, this is a good year to consider investing in consumer electronics in anticipation of a good holiday return. That said, consumer electronics have been a tricky game for the last decade, so consider staying conservative and prepare to sell before any earnings reports of 2017.
S&P 500
If you’ve been following the stock market for the past three years, then you should already have diversified holdings in the S&P 500. It is in the middle of a record bull run, and oddly enough it has seen consistent boost during back to school since 2013.
If you haven’t put money into the S&P 500, it isn’t yet too late. If you have been paying attention, enjoy watching your stock value increase at the end of the next quarter.
Banks
Back to school season represents a major influx in lending across the nation. A new semester means renewed loans for returning students and, more importantly, a biggest freshman class yet borrowing more than ever before.
You may have already read reports on the student debt bubble and the potential risks, but until a major change is forced into the industry, this is a market that you can make work for your portfolio.
Now is the best opportunity to date to get into this industry, as more and more reports suggest impending interest hikes will finally hit. Instead of letting those hurt your finances, you can benefit from the Fed hike by investing in the banks that will reap the most interest.
When it comes to student loans, there are five groups leading the pack. Sallie Mae is the clear leader in this group, and the business currently holds more than $150 billion in student loans. Because they are leaning the hardest into student debt, they represent both the highest profit potential and the highest risk.
Wells Fargo comes in at number two with more than $10 billion in student loans. That makes this a much lower risk investment, but the short-term gains will also be lower.
Rounding out the top five are Discover, NelNet and JPMorgan Chase. Investors in student debt need to keep a particularly sharp eye on the November elections, as legislation will probably alter the course of this market before anything else does.
Sales
This is an uncommon discussion among investors, but the old adage about a dollar saved is still true. Whether you have a tie to school or not, many of the school supplies that are on sale through the end of August have a place in every home and office.
Take advantage of those sales to stock up on supplies that would otherwise eat more of your funds, especially if you need new technology like personal computers or printers. This tip is especially potent for small business owners.
Keep in mind that all of these tips are seasonal and should not necessarily constitute a major portion of your investment strategy, but for those who like to micromanage and try some variation on their approach, there are some opportunities to make money.
Regards,
Ethan Warrick
Editor
Wealth Authority
