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Investing/Strategies / Mechanical Investing
|Subject: Re: Cash alternatives in a retirement account||Date: 2/24/2014 9:49 AM|
|Author: Rayvt||Number: 248736 of 256290|
the January effect.
Sorry, one last thing I forget:
#7: the January effect is not actionable.
How would you use this indicator? I don't see how. So it seems to me to just be something for writers & talking heads to write & talk about.
What could you do with this indicator?
Wait until the end of January and then either stay in cash through December, or buy stocks? Q: Which stocks? The whole market -- SPY, VTI, etc.? Or individual stocks or sectors? AFAIK the Jan Effect studies have been on whole market, so we don't know if it says any predicion about individual stocks/sectors.
So, at end of Dec ... Jan 1st is here. What do you do for Jan? Continue your current positioning? Go full-out into stocks?
In a typical investing lifetime, you only have 30-35 January months -- and probably only the last 10 have a significant amount of money in your investment portfolio.
The way you make money in the market is like a casino -- have an edge and crank it over and over agsin, so that the edge has the opportunity to work for you. That means hundreds or thousands of times, not just a handful of times.
With only 30-35 opportunities (but realistically only the last 10-12 make any difference), there are just too few chances for your edge to play out.
* Questionable indicator.
* Not actionable.
* The signals are too infrequent.
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