Missing the January Effect

 I have heard of the January  Effect where investors (in US and perhaps other countries as well)  looking to create tax losses to offset capital gains, sell their stocks (usually small caps) in December, lowering prices (a sell-off) then comes January there would be a buying spree to grab those low-priced stocks (a rally) leading to a general increase in stock prices during the month of January. Yes, I did notice the phenomenon in our Malaysian bourse in the first week of 2010 but I partially attributed it to the natural continuation of the year-end global market run-up which saw the Dow Jones Industrial Index climbing up. 

January Effect 4Jan

by AfraidtoTrade

Almost all my trading and services portfolios were up such as  SIME  which went to 9.11 and AXIATA  broke its 3.15 resistant level to 3.17 so as TM going up to 3.15  from 2.99 and look at my construction stocks MRCB and HSL! I regretted very much  buying  additional shares of  THPLANT at 1.47 when MRCB was 1.37 during the same period. While the former has gone up to 1.53 today, the latter has shot up to 1.68!! I have a soft spot for palm oil. I really must get out of this mindset.


Today it looks like the January Effect (due to whatever reasons) has become short-lived. SIME has gone down by almost 15 sen. Now, how did I miss capitalizing on the Effect? Basically I am beginning to love my stocks, I know this is dangerous. I may not be able to create steady wealth if I go on like this. Fancy having to wait for 12 more months to catch another January Effect and I bet  I would still miss that.....perhaps I may need to rely on those  fund managers after all... but then stock-watching  would not be fun anymore.