Capitalizing On Seasonal Effects – Investopedia 12-24-11

Salient to Investors:

Markets tend to have strong returns around the turn of the year and during the summer months. September is traditionally a down month. October is positive historically, despite 1929 and 1987.

If you plan on selling to book a tax loss, consider doing it before many investors start to sell stocks en masse at year’s end.

Jeremy Siegel and the Yale and Jeffery Hirsch. say investors return to equity markets in January with a vengeance, pushing up mostly small cap and value stocks. The end of December has been a good time to buy small caps or value stocks.

Stocks tend to rise at the turn of a month and fall in the middle of a month mostly due to mutual fund money flows.

Mutual fund managers window dress at the end of each quarter by buying stocks that have done well during the quarter – keeping your job is more important to many than the best interest of mutual fund holders.

US stock markets tend to rise ahead of three-day holidays.

Stocks have a tendency to drop on Mondays, perhaps due to a large amount of bad news being released over the weekend. or to gloomy investors during the early hours of Monday trading.

Monday is the best day to buy or cover and Fridays is the best day to short position.

Buying mutual funds in December before the annual distribution risks paying taxes for gains made by the fund throughout the year.

Read the full article at http://www.investopedia.com/articles/05/seasonaltrends.asp#axzz2AXdQ5YP8