Tis The Season...For Stock Market Gains
Tis The Season...For Stock Market Gains | |
| Tis The Season...For Stock Market Gains By John Persinos
Bah, humbug. It's only the first week in November and already the holiday-themed ads are bludgeoning consumers. Yes, the commercialization of Christmas every year is annoying. However, as a pragmatic investor, you should grit your teeth and welcome it. As November gets underway, the stock market is entering a seasonally favorable period. You've probably heard of a phenomenon known as the "Santa Claus rally." Definitions vary, but the Santa Claus rally generally refers to market gains that happen in the week leading up to Christmas. However, the season's upward bias often lasts longer, from November through December and into the first few days of the new year. The holiday season tends to fuel greater consumer spending and economic activity. This increased spending can boost the revenues and earnings of many companies, which, in turn, can boost stock prices. Many investors and fund managers also engage in tax-loss harvesting during the end of the calendar year, which involves selling underperforming investments to offset capital gains, which can lead to increased trading activity and potential market gains. Institutional investors pursue "window dressing" during this time of year, a practice where they buy or sell securities to make their portfolio look better on year-end financial statements. This can place buying pressure on certain stocks. Institutional investors also tend to allocate capital at the beginning of the year and may make portfolio adjustments during the holiday season in preparation for the new year. Read More... |
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