Stock Market Trend [Theories/Myths]

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Alexa9
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Stock Market Trend [Theories/Myths]

Post by Alexa9 » Sun Feb 18, 2018 1:51 pm

What are some of the more creative market trend myths you've heard? (I don't buy any of these btw)

Markets up on the days of the month welfare is issued.
Markets up at the beginning of the year due to IRA contributions.
Markets down at the end of year due to tax loss harvesting.
Markets up when 401k contributions automatically invest.
Markets up around Full Moons and down around New Moons (get out your crystal ball).
Sell in May and go away.

JBTX
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Re: Stock Market Trend Conspiracy Theories/Myths

Post by JBTX » Sun Feb 18, 2018 2:22 pm

Alexa9 wrote:
Sun Feb 18, 2018 1:51 pm
What are some of the more creative market trend myths you've heard? (I don't buy any of these btw)

Markets up on the days of the month welfare is issued.
Markets up at the beginning of the year due to IRA contributions.
Markets down at the end of year due to tax loss harvesting.
Markets up when 401k contributions automatically invest.
Markets up around Full Moons and down around New Moons (get out your crystal ball).
Sell in May and go away.
Welfare doesn’t make any sense. These aren’t your typical investors.

IRA contributions could make sense, same with TLH.

Sell in may go away has historically on average been true, but that doesn’t mean it will be going forward.

There is some evidence that end of year mutual fund window dressing tends to hurt small caps and gives them a boost Jan 1st.

Even if there is conceptual merit to some of these I don’t think they will necessarily be true going forward.

bhsince87
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Re: Stock Market Trend Conspiracy Theories/Myths

Post by bhsince87 » Sun Feb 18, 2018 2:27 pm

I've heard that the market often drops on days before taxes are due, most notoriously around April 15. Seems like that would be easy to test out, if one cared to do so.

But I suspect the advent of quants and computer trading have made this and other myths a thing of the past, assuming they ever exited in the first place.
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Dominic
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Re: Stock Market Trend Conspiracy Theories/Myths

Post by Dominic » Sun Feb 18, 2018 2:39 pm

I've heard that, if you subtract January, the value premium doesn't manifest itself.

There's also a commonly held belief that a secret Fed agency buys up equities on days where the market is close to shutting down for dropping too much in a single day.

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whodidntante
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Re: Stock Market Trend Conspiracy Theories/Myths

Post by whodidntante » Sun Feb 18, 2018 2:44 pm

Alexa9 wrote:
Sun Feb 18, 2018 1:51 pm
Markets up on the days of the month welfare is issued.
I don't think "welfare" payments are really a thing in the USA. Unless you are referring to social security disability, social security retirement benefits, public housing assistance, public food assistance, military medical and pension benefits, that kind of thing. And very little of that ends up in the stock market, I think.

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Re: Stock Market Trend Conspiracy Theories/Myths

Post by LadyGeek » Sun Feb 18, 2018 4:01 pm

This thread has run its course and is locked (conspiracy theory). See: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
  • US or world economic, political, tax, health care and climate policies
  • conspiracy theories of any type
  • discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.
This thread is locked based on past experience that contentious disagreements will soon result.

Update: See below.
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Re: Stock Market Trend [Theories/Myths]

Post by LadyGeek » Sun Feb 18, 2018 4:11 pm

I retitled the thread. Let's avoid "conspiracy" aspects of stock market trends. This thread is now unlocked.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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