R U Ready 4 Dec/Jan Effect?

[waggie945]

The January Effect is kind of a "misnomer" since mutual funds end their fiscal year on OCTOBER 31st. As a result, the January "effect" has a tendency to happen much earlier.

With funds cleaning out their portfolio, and tax-loss candidates having been shed by the end of October, this is what has made November and December so seasonally strong.

Since there have not been many "losers" in this year's market, especially with the S&P small and mid-cap indexes hitting ALL-TIME HIGHS, I would not invest too much in this theory for this year.

Just my 2 cents.

 

[Pabst]

Quote from OldTrader:



That's what makes a market my friend. Someone buys, someone sells. Please feel free to fade me.

But before you do, understand I did not say that small stocks were going down. Your question had to do with the January effect.....something that you evidently know little to nothiing about.

As explained to you elsewhere in this thread, the January effect arises because of tax selling. This year because of the strong performance of small stocks, I would not expect to see tax selling prior to the end of the year. Why would anyone sell their small stock that they have a large gain in, just to pay taxes this year? Rather, I would expect this selling, if it is to take place, to occur in January.

There may be some candidates for tax selling this year....drug stocks for instance.

So again, the January effect has its roots in tax selling by those looking to sell their losers to establish their loss for this years taxes....which later causes a rally in January after the tax selling has let up.

Speaking of rearview mirror....wouldn't you say that the January effect is a classic rearview mirror strategy?

OldTrader

WTG, OT!

Blue Horeshoe: A little advice. Being able to tap into the wisdom of Oldtrader is the reason to be on this board.

 

[Specul8r]

Horeshoe,

Why spread this bet? Just run a scan for low priced / low rs piece of shits that do not have much big money participation...

PEACE and good-specul8tion

 

[BlueHorseshoe]

Quote from Specul8r:

Horeshoe,

Why spread this bet? Just run a scan for low priced / low rs piece of shits that do not have much big money participation...

PEACE and good-specul8tion

Thanks ... been busy doing that actually. Lot's of crap to wade through, have found a few to punt w/ ... these flyers not my usual game.

Why hedge? Well, because I want to specifically capture upside in volatile small caps during December/January. At the same time, upside for some large caps like MSFT, GE, look considerably less promising. Third, I much prefer the P/L profile of spreads as they tend to smooth out volatility and reduce drawdowns. And finally, if I long/short the right futures I should be able to get some very favorable margining that could really allow me to leverage up ... though I haven't done this before & need to check.

 

[BlueHorseshoe]

Quote from Pabst:



WTG, OT!

Blue Horeshoe: A little advice. Being able to tap into the wisdom of Oldtrader is the reason to be on this board.

Ahhh ... the back slapping comfort of the herd is so seductive.

I do respect Oldtrader, but regardless of his inclinations I'll be picking my spot to leverage quite long as year-end approaches. The risks are being too late, hanging around too long, and succumbing to consensus thinking.

Pabst - if you want to pal around w/ some bears you might post on the 'How high can the S&P go?' thread. You'll find some real cameraderie among like-minds there.

 

[Specul8r]

Horseshoe,

Old did not say he was bearish, he said he didn't think there would much of jan/dec effect this year. He also threw you a bone, but so far you have not thanked him -- healthcare sector or others that have not participated in much of the 03' rally...

PEACE and good-specul8tion

 

[Pabst]

Quote from BlueHorseshoe:




Pabst - if you want to pal around w/ some bears you might post on the 'How high can the S&P go?' thread. You'll find some real cameraderie among like-minds there.

LOL. Touche'

 

[Specul8r]

Anybody feel like big money is desperately trying to keep this heavy market afloat so that they can lock in these gains???

 

[JT47319]

Quote from Specul8r:

Anybody feel like big money is desperately trying to keep this heavy market afloat so that they can lock in these gains???

There is no opinion. There is no emotion. There is only the chart.

 

[Specul8r]

Quote from JT47319:



There is no opinion. There is no emotion. There is only the chart.

OK! Thanks for the sage advice JT! You the man...