Many say that investors make various investment decisions during the holiday season. Since people have more money during the holidays, many grow their investments, acquire more, or sell to make a better profit. And since this is the case for many shareholders, the stock market becomes unpredictable before, during, and after the holiday season.
Even though many expect that the holidays are a season investors should look out for, many factors affect the market, including volatility, price changes, and indices demand. That’s why before you do something with your stock investment, it’s best to base your decision on past market trends and not solely on feelings.
If you own a stock or plan to acquire one, this post is for you. Here are some stock market dos and don’ts to remember this holiday.
Dos
1 – Do not make a decision based on what others are doing.
One of the things that many investors do is to follow what others are doing. Many investors already have negative experiences with the stock market because of peer pressure and doing what others do without researching if it’s right or wrong.
To avoid that, it’s best to avoid falling into schemes of other people’s convincing sales talk and understand the market before deciding to sell, invest more, or buy a stock.
2 – Do focus on your investment goals.
Many people who own a stock focus on building long-term wealth growth. Others, on the other hand, only invest in stocks to practise trading shares or increase their initial investment by a small percentage. Yes, the holiday atmosphere can be tempting to make impulsive decisions that don’t align with your goals. That’s why you need to focus on yours for efficiency.
When you know your plans for your investment, it will be easier for you to stay away from impulsive decisions and avoid making moves that you may regret.
3 – Do think about the “holiday rush.”
Holiday rush is the term used to refer to the chaos and fast-paced schedules of people during the holidays. But once Christmas and New Year are over, people will lie low and slow down. The same applies to the earnings and market trends of companies.
It may be enticing to see the increase in a stock’s value, but you must remember that its holiday value may not be for long. It’s essential, especially if you look at your stock investment long term and not for a short period only.
4 – Do remember that companies perform year-end rebalancing.
The last “do” you should remember is that companies perform year-end balancing. Year-end balancing is when companies evaluate and analyse their performance to strategise and understand the areas they need to improve for the upcoming year.
That means the share value of a company can drastically change in the new year. Once the holiday rush wears down and companies start working on improving their lapses from last year, share prices will likely increase or drop again. That’s why being calm and strategic with your stock market decisions is necessary.
Don’ts
5 – Don’t only rely on the information you see in short online videos; always base yours on facts.
One of the most common things we encounter on social media is misinformation. There are many persuasive influencers online that sell opinions without a factual basis. As a result, many believe the misinformation and make critical decisions based on it.
If you see a trending video regarding the market, make it a habit to check the charts first and analyse a stock’s past performance from the last months before believing what you see or hear. Don’t only rely on the information you see; always base yours on facts.
6 – Don’t forget the “January Jump” if you plan to sell or buy in December.
Many stock professionals say the stock market typically performs well at the beginning of the year. Hence, they came up with the term “January Jump.” They also use the saying “as goes January, so goes the year” to refer to historical studies showing when the S&P 500 rises in January, it’s more likely to perform well for the rest of the year.
If you think December is the best time to sell or buy a stock, don’t forget about the “January Jump” to help you better decide. But then again, the stock market is volatile. That’s why you must mix your wit, gut, and knowledge when discerning what to do next.
Keep your calm despite the holiday rush.
It can be tempting to do something with your stock investment, especially when others are doing whatever they think is the best thing to do at the moment. But here’s my final tip. Always keep your calm despite the holiday rush. It is one of the seasons when the noise becomes too loud–and people’s opinions are everywhere. When you’re calm, it will be easier to make wiser, smarter, and future-oriented decisions that benefit you.
Written by Bianca Banda
