This is the best months to buy stocks

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What is the best month to buy stocks? What is the best day of the week to buy stocks? Is it better to invest everything at once or spread it out evenly? This is the answer when analyzing over 40 years of data on when is the best time to buy stocks. Let’s start by taking a look at the 4 events investors look forward to.

1. The first is called the January Effect. At the beginning of the year the stock market tends to do positively and investors make money. This is called the “January Effect” because investors are putting their money back into the stock after tax loss harvesting which is a strategy to reduce paying taxes. People sell their losing stocks and offset their income. The other theory is that more people want to start investing at the start of the year because of things like New Year’s resolutions.Between 1928 to 2018, this January Effect where stocks have ended up green has happened 56 out of 91 times aka 62% of the time, so it’s not guaranteed to happen but usually that’s what investors expect to happen.

2. The Santa Clause Rally. This explains that at the end of each calendar year, the last 5 trading days of December and the first 2 trading days of January the stock market usually wants to go up. This is because December usually starts slower but then picks up because people tend to make more money at the end of the year and spend it. Another reason why December goes up is because people also anticipate the January effect of rising stock prices so they buy back in to the market. Between the years of 1950 to 2019 the Santa Clause Rally happened 77.9% of the time with an average return of 1.33%.

3. “Sell in May and Go Away”. What this means is that investors usually make some money throughout the beginning of the year and leading up to the summer months but then they sell in May before the stock market drops. They will buy back in November in anticipation for the Santa Clause Rally. Between May 1st to Halloween October 31st, the stock market tends to not do as well because investors go on vacation and they typically sell some of their stocks to pay for those vacations.

4. The October Crash. There have been 3 major crashes in October – the bank panic of 1907, the crash of 1929 (October 24), then we had the crash of Monday October 19, 1987. October has a bad reputation for investors but it’s typically a good month other than that.

SUMMARY: Best months for investors in the stock markets are typically April, October, November, and December.

Now let’s talk about the best and worst days of the week to invest and buy stocks. the worst day for stocks is actually – Monday. It’s called the Monday effect because companies like to release bad news and press over the weekend, by the time the market opens on Monday, the effects are felt and the market can go down. There is no consistent data that shows when is the best time to sell. The best time to sell stocks is when you’re in retirement.

Lump sum investing vs dollar cost average – should you invest everything at once or spread it out evenly? The best between the two has historically been lump sum investing which has made investors more money 66% of the time. However, most people are still better off with dollar cost averaging.

The conclusion: If you started investing with $10,000 on January 1st 1980 until March 31st 2020, you would have $697,421. But missing the best 5 days meant having $265,010 less than if you had done nothing and just stayed in. If you waited a little longer and missed the best 10 days, you’d end up with $384,044 less. If you sat out 30 of the best trading days you’d have $581,940 less. Stay invested in the market for as long as possible and try not to time anything by selling.

Sources:
https://on.mktw.net/3f4mUEB
https://bit.ly/3dcL6Cn
https://cnb.cx/3cTZM9i
https://bit.ly/397LiRX
https://bit.ly/3lDLKMO
https://bit.ly/3tPvkE7

*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.