What is the Calendar Effect?
A calendar effect is a theory thatprices perform differently at different times of the year.
How Does the Calendar Effect Work?
There are many different calendar effects, including the Monday effect, "Sell in May and Go Away," and the . For example, investors create a self-fulfilling prophecy regarding an October Effect by being fearful that because the crashes of 1929 and 1987 both occurred in October, the month is somehow forever tainted. If more and more investors believe the October Effect exists, they sell their early in October, thereby depressing prices and creating the very effect they intended to avoid.
Why Does the Calendar Effect Matter?
The calendar effect is just one of many superstitions that distract investors from doing fundamental and technical analysis of their existing and potential . Once in a while, some evidence of one of these effects surfaces, but generally there is no real correlation between month and performance.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
If the recent debt ceiling debate has taught us anything it's that the government knows how to spend...Read More →
When the markets are up, everyone is excited about investing. When they are down, not so much. As a seasoned investor (I’m talking decades) and student of...Read More →
Back in the late 1990s, little old ladies became stock-picking experts. The local mailman was just as comfortable recommending Lucent and AOL as he was talking about the weekend forecast. ...Read More →