Most investors start winding down their investments around this time of the year… but after decades of research, I’ve learned that is a BIG mistake!
After all, it’s the most profitable time of the year…
Over the next two weeks, you could make back all the money you’ve spent this holiday season and more!
You just have to understand why the timing of your moves could make or break your finances…
NOTE: most people do this backwards and lose A LOT of money…
Have you heard of The Santa Clause Rally?
This term describes the trend in market movement in the last two weeks of the year.
The only issue is that most people don’t know how to get in and out of the rally for the most profitable payout.
But after today, you’ll be on the other side of the fence, getting in at the right time and getting out when everybody else starts to lose.
I think people are so amused by the idea of The Santa Clause Rally that they forget to take notice of what’s actually happening.
What recent history has told us is that the markets tend to shift higher during these two final weeks of the year, but it’s all about when you get out that makes you the real money.
If you haven’t been buying stocks for the last 12 months, then you clearly haven’t been listening to a word I’ve said.
The market has been going up, up, and… up.
It’s pretty clear what that means for the money you have in the market.
A lot of people are stating how easy it is to make money in this market… but, while that might be true right now, they’re about to come across a sharp realization.
Before I get to that, let’s touch on what it is that’s driving the Santa Clause rally.
Well, it comes down to a few factors.
The first one is simple: Investor sentiment tends to be at a yearly high around the holidays.
Can you recall how often I tell you to leave your emotions out of your finances?
Hundreds of thousands of people do exactly the opposite.
The holidays are a joyful time and that drives people to invest any extra cash they haven’t spent on presents.
This extra money in the market drives stocks up.
Simple.
There’s also the factor of consumer sentiment.
With all the spending, the retail sector tends to boom during the holidays which drives the overall market even higher.
You also have to take into consideration the fact that most of the workforce is receiving its holiday bonus.
This extra cash burns a hole in the pockets of many people, so a lot of them decide to invest it.
Whichever way you look at The Santa Clause Rally, it’s safe to say there’s money being driven into the markets.
The S&P 500 ($SPX) has been hitting all-time highs day after day, and, as I write, the market is up 0.6% today.
In normal market conditions, that’s HUGE.
So, taking into consideration the consumer/investor sentiment and current market conditions, let’s see how history compares.
In the last two weeks of 2015, the S&P 500 gained 3.8% before falling almost 15% by mid-January 2016.
2014 was no different… the last two weeks saw a 6.1% advance, followed by a 5.7% fall at the end of January 2015.
The last two weeks of 2013 saw the S&P 500 add 4.6%, only to fall 6.4% by February 2014.
Do you see the pattern here?
The Santa Clause Rally shows most investors paper gains, but a lot of them don’t realize their gains and watch their investments sink in the first two months of the following year—this prompts them to sell in a panic.
What these investors are doing is buying high and selling low… That’s a bit backwards in my books.
What we’re going to do here to take our profits is buy high and sell higher!
So, this is your week to buy any stocks you’ve been eyeballing.
Take a look at your shortlist, any recommendations, and any stocks that seem cheap (but not weak!) at the moment.
If it seems like a viable investment AND you’re not investing money you can’t afford to lose, then my evidence tells us it’s most likely the right time to pull the trigger.
But, again, don’t hold onto those trades into the new year… unless you want to lose your capital, that is.
Please note here, if you’re holding onto longer-term investments, don’t sell them based on this information I’ve provided…
This strategy is simply for the traders who are looking to get in and out, while making their holiday expenditures back and more.
The last day of trading in 2017 is Friday, December 29th, when the markets will be closing at 2pm.
