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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (10738)	11/7/2002 12:48:06 AM
From: Q.	Read Replies (2) \| Respond to of 10921

OT Sam, re. January Effect: (1) What is the primary cause, in your opinion, for the anomaly known as the January Effect. The stocks I play for the January Effect are those that are likely beaten down by individuals selling for a tax loss. My observation is that the effect is bigger if the stock is owned primarily by individuals, and not by institutions. (2) Is there any relation between price change during October and the succeeding January period? [If it is more than a coincidence that these two months correspond with the beginning of the new fiscal year for most investment entities, does a strong October tend to foreshadow a strong January?] For stocks that are owned primarily by individuals, I wouldn't think that institutions and their FY calendar make any difference. You seem to have in mind an effect for stocks that have a significant ownership by institutions, which are outside the realm of what I play for the January Effect. (3) What would be the profile of the ideal January effect prospect? [In what order would you rank the following potential criteria (and what additional factors might you add): (1) biggest % decline over previous 52 week period; (2) price per share < $5; (3) strong balance sheet.] your questions are answered here: Message 15298045 additionally, I would add an additional filter to eliminate stocks below $0.40, as I posted a year later, to avoid basket cases that are too near BK. Lots of the companies I'll buy for January Effect will eventually go BK, but I want them to be healthy enough that they'll definitely survive for a month! (4) Have you noticed that there is a reverse January effect of deferred profit taking which takes place at the beginning of the (calendar) year in those stocks which have had the biggest percentage gains of the year, where investors have previously deferred profit-taking for tax purposes? I've noticed this in a few instances, but I've never done any kind of study. I think you'd need to do backtests to determine what criteria to screen for, and what holding period to use.