01-05-2017, 11:10 PM
The practical way to take advantage of the January Effect is to buy dips in certain stocks that may occur for the following two reasons: 1. Tax-loss selling. One strategy that is commonly employed by investors is to offset gains by taking losses on certain stocks. Such selling for tax purposes artificially depresses the price of certain stocks. 2. Window dressing. Portfolio managers in their reports do not want to show investors that they were holding stocks that did not do well. Therefore, they sell such stocks, artificially depressing them further.
How the ‘January Effect’ in stocks can help you pocket quick gains - MarketWatch
And they even have an idea..
The so-called January Effect offers an opportunity to potentially make about 30% in three months in the stock market. The January Effect is a phenomenon that makes prices of certain stocks rise more than indices do. In the past 30 years, we have made money from the January Effect about 75% of the time, broken even about 10% of the time, and lost money about 15% of the time. For 2017, The Arora Report has published a list of 32 stocks, complete with “buy” zones and recommended position sizes to profit from the January Effect. Let us illustrate this with an example of hospital operator Community Health Systems CYH Community Health is on the list.
How the ‘January Effect’ in stocks can help you pocket quick gains - MarketWatch