The "January Effect"

By: ShortMeTina

​Is your investment thesis fundamentally broken or is this the beginning of the January Effect?  If you’re invested in smallcap stocks and have seen a steady decline in share price, some might call it the precursor to the “January Effect”.  ​

What is the “January Effect”?

While you may not be thinking about the taxes you owe Uncle Sam in December, I assure you many investors are.  
Are you staring at monstrous gains that were attained in 2015?

 I am here to tell you that Uncle Sam wants his share and to give him as little as possible; many investors will sell their poor performing stocks VRX -37% (Valiant Pharmaceuticals International Inc.) in December to offset their 2015 gains.  Thank you AMZN +114% (Amazon) and NFLX +152% (Netflix). 

This selling of poor performers generally creates a sell-off in the broader markets during the month of December.  
January rolls around and you now have, for the most part, promising stocks at a discounted rate.  Buyers step in and pressure in buying during the month of January causes an uptick in the markets. And this “phenomenon” or “myth” is described as the “January Effect”.  

Do you believe in the January Effect?  What stocks are you picking up? 

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Thanks for the support and thanks for following my journey.