Although it is easy to dismiss these changes as chance, there have been well-documented historical trends in how the value of stock changes throughout the month and year, with some days and months consistently faring better in the market. Although stocks can be profitable any time, and waiting to invest only at these times may miss other opportunities, an awareness of these trends can be helpful.
Best Days of the Week
Looking over a wide historical time frame, stock values have gone up on Fridays more often than other days of the week. The difference, unfortunately, is not particularly significant and does not suggest it would be worth it to invest money in stocks at the end of every Thursday and take it out again at the end of every Friday. In a shorter time frame, like any given year, another day could have a better average performance.
Best Days of the Month
Particularly for stocks that have been rising over the long-term, prices historically rise more significantly during the last days or the month, and the first day of the month, and then fall in the following early days of the month. It appears that this is because of money managers, anticipating more money becoming available at the beginning of the month from 401(k) plans and savings, piling money into stocks as the new month draws near. The rise at the very beginning of the month may come as this money becomes available.
Best Month of the Year
The beginning of May through the end of October has been a bad time for stocks, while December, January and April have been the best months of the year, the first two months believed in part to be connected with consumerism related to the holiday season. While December stands out for the benefit of coming before another strong month, April has the downside of coming directly before the period known for being bad.
Other Consideration
Although these days and months have done well historically, there are other things to consider. Of course, investing in the days and month before the times when you expect values to rise will be helpful for receiving the full benefit of these changes, but this is not the only reason the times that have performed best are not always the ones that are going to make your investments the most money. Money in stocks can be made be correctly predicting falling values as well as rising ones, and that the best investment you can make will also be shaped by the kind of investment you are making, including how much you have to invest.
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