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Old October 25, 2000, 10:44 AM
Dien Rice
 
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Default How to make money from The January Effect

Hi Amber,

Wow, interesting post! Yes, all these patterns are quite interesting.... You can make money just knowing the patterns that tend to repeat themselves....

There are also effects due to the months of the year.... One of them is called the "January effect."

To give credit where credit is due, I first learned about this earlier this year I think from my brother Thomas.... :)

Studies have shown that about 1/3rd of the year's raise -- especially for the stock of smaller companies -- tends to occur in January!

They're not completely sure why.... It could partly be due to the more positive feelings of the beginning of a new year....

However, it's an interesting effect to know about....

I learned about it due to the book (which Thomas showed me), "The Winner's Curse" by Richard H. Thaler (who's a Professor of Economics at Cornell University).... Chapter 11 is called "Calendar Effects on the Stock Market".... :)

Dien Rice