One might be hearing this phrase “The January Effect” circulating around a lot but what does it actually mean?
In investment and trading terms, it is recognised as the increase in stock prices throughout the month of January. Often following a decrease in stock price of the previous month. The reasons for this are relating to tax loss harvesting, investment of end of year bonuses, consumer sentiment and mutual fund managers hoping to purchase and reshape their portfolios.
To prepare oneself, you must research a company’s financial health. This includes: revenues, growth potential, profit margins and market position.
Grasping these key concepts will aid you to understand fluctuating prices and provide greater confidence in stocks you invest in thus creating a higher profit.