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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: Annette who wrote (37952)	1/2/1999 10:20:00 PM
From: DO$Kapital	Read Replies (1) \| Respond to of 119973

You folks are engaging in the great un-American (Canadian) pastime of complaining about the weather. HERE'S the other kind of January effect: THE JANUARY EFFECT What exactly is the January effect? Will it be an influence in the market this year? And if so, how can investors capitalize on it? Simply put, the January effect is the tendency of small stocks to outperform larger, blue chip issues at the end of one year and into January of the following year. January effect research does not suggest the markets will trend upward in January. What the research does say is particularly in January, small stocks tend to outperform large stocks whether the general market trend is up or down. Over the years, small stocks have made their biggest move relative to big stocks in the December to January time period. Not all analysts subscribe to the theory that there is a January effect. Those who do recognize it as a stock market anomaly, frequently differ in their ideas on its causes and whether it will continue. Still, investors may want to take into account the possibility of a January effect when considering investment opportunities. Various studies have found a typical gain nearly one-third of its yearly return during the month of January. That works out to be about four times what would be expected if returns were evenly distributed. Stocks of small firms seem to be particularly influenced by this tendency. Returns for small-cap stocks can be as dramatic as 10 to 12 times higher than the returns of large company stocks. A number of theories have arisen about what might cause the January effect. These theories include the following: End of the year tax-loss selling pressures small cap stocks and creates a buyer's market in January. Secondaries come under pressure at the end of the year from "window dressing" –a tendency by portfolio managers to "clean out" the stock of smaller, lesser known companies from portfolios for reporting purposes. Then the stocks are repurchased after the reporting year-ends. Renewed interest in buying stocks occurs after the holidays. Investors look for stocks they consider to be underpriced. Studies have shown that a high percentage of small stocks tend to be underpriced. Additional funds come into the market during January as the new year brings investment dollars from IRA's and pension plans. ***January is typically a strong month for mutual-fund inflows, while initial public offerings and overall stock issuance is light. Historically, stock-price movements in January have been a strong predictor for prices during the rest of the year. Since 1950, this so-called January Effect has proved predictive in 42 out of 47 years. The most recent losing January came in 1990, which also was the last down year for the Dow. Only one very good year, 1982 followed a January decline, according to Yale Hirsch, who tracks the January indicator in the Stock Trader's Almanac. Tom Glavin, the equity strategist at Deutsche Morgan Grenfell, says the market has gone up an average of 18.2% in years in which January's returns on stocks were positive, and just 3.3% in years when the month was a downer.