Wednesday, December 1, 2010

More First Day of the Month Effects

I was going to go do the research but much better when someone else does it for me.  While this 1st day of the month effect is much longer term in nature (see post this morning about how good it has been over a 12 year period) we have some more recent data per Marketwatch.

Coming into today since March 2009 (the lows of the market), the market has been up 15 of the 19 first days of the month.  (79%) We can now add today, so that is 16 out of 20 sessions. (80%)

Average gain for that one day is 0.72% (not including today, which will bump that figure up)

If you give me 80% odds that I'll make on average 0.75%ish in 1 session; I'll call you Benjamin Graham on steroids.


How have all the other days of the month done since March 2009?  Up 57% of the days (slightly better than a coin flip), with an average gain of 0.13%

[This data uses the DJIA, not S&P 500]

Conclusion?  You can live a stress free lifestyle by only being exposed to the market from 3:59 PM the last day of the month to 3:59 PM the first day of the month, and capture a great portion of the entire year's returns.... freeing all other days for better pursuits such as supporting the Chinese middle class by going to the mall and shopping, rather than staring at this darn screen all day.


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