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Strategies & Market Trends : January Effect 2002

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To: Doc Bones who wrote (32)12/16/2001 9:32:58 PM
From: Q.  Read Replies (1) of 91
 
a bad idea from Barron's: "Conveniently, the Chicago Board Options Exchange last week began trading options on the Russell 2000."

In all three years I've kept records, I've been able to greatly outperform the Russell 2000 when investing for the January effect. This index just doesn't respond nearly as much in January as smaller stocks do. That's because it includes the smallest 2/3 of the biggest 3000 stocks in the US. These stocks are about the smallest that institutions can consider investing in, but individuals can choose from a universe of roughly 7000 stocks on the major 3 exchanges, and that doesn't even include BB and pink sheet stocks.

It's the smallest stocks in this universe that are most strongly affected by the January Effect. Not the bigger stocks that are tracked by The Russell Organization.
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