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The end of my secret favorite trade

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January 02, 2014 – Comments (16) | RELATED TICKERS: QQQ

Every single year since the Nasdaq has existed, the index has opened higher on the first trading day of the year than it closed on the last trading day of the previous year. Every single year until today. 

 

I discovered it 3 years ago...this being the fourth one I tried. I failed this time. Made 14k last year off of it, which is a lot of money for me (I was 23 years old transitioning between jobs). I lost 2.7k for me and griffins fund this time

 

never said anything because I didn't want people to know about it and therefore kill it. Oh well, 25 or 30 years, finally came to an end

 

 

16 Comments – Post Your Own

#1) On January 02, 2014 at 3:29 PM, Mary953 (73.11) wrote:

It has been a record year in the market.  Perhaps that has something to do with it. Try again next year.  I promise to have forgotten by then...and nice to see you posting here.  ;)

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#2) On January 02, 2014 at 3:29 PM, portefeuille (99.60) wrote:

griffins fund or Griffin's fund?

If it is the latter tell him he should tell his secretary (or you or some lowly paid trader) to copy our trades ;)

http://caps.fool.com/Blogs/why-you-should-follow-or/909634.

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#3) On January 02, 2014 at 4:01 PM, dragonLZ (99.45) wrote:

Valyooo, As they say, all methods work until they no longer work (or something like that). :)

Happy New Year and good luck in the future.

p.s.

I don't know if you saw this. I wasn't able to comment for quite some time and just today discovered I'm able to comment again (hope it's going to last more than a day).

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#4) On January 02, 2014 at 4:05 PM, Valyooo (99.47) wrote:

Port,

 

I'm talking about me and griffin416, the caps player. We have a small hedge fund with some family and friends money. Your results are impressive, but he's been doing it for 17 years and averaging 26% a year over that span. Pretty good I would say :)

 

dragon on I did see that and I appreciate it. Happy New Years to you too! 

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#5) On January 02, 2014 at 4:09 PM, Valyooo (99.47) wrote:

Thanks Mary. What are some of your newest purchases?

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#6) On January 02, 2014 at 4:13 PM, JakilaTheHun (99.94) wrote:

Valyooo,

The January affect is pretty well known in investment circles.  Posting about it on CAPS would not result in a massive number of people suddenly exploiting it. :)

Actually, the reason the market tends to rise in early January is due to tax reasons.  People will sell off their losers in November and December and then start buying in January.  This way, they'll pay less in taxes in April. 

The problem in 2014:  the S&P was up almost 30% in 2013.  There aren't a whole lot of "losers" to sell. Instead, people are probably doing tax-selling in January to delay the taxes on their gains for another year.  Hence, it's the reverse affect.

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#7) On January 02, 2014 at 4:19 PM, Mary953 (73.11) wrote:

A couple of months ago, KO and DIS (in time for a small gain plus year end dividends).  Then in Dec, Twitter (TWTR) at $45 which ran up to $74 and dropped back to $60 where I bought more.  It is back up to $67 at this point, and I have a stop riding along that will ensure that I make a few thousand even if it drops enough to kick in.  Nothing else I feel confident enough about right now and absolute loads of stuff that I want to try.  All the stuff I want to try out is in my CAPS folder to track for a bit.  If it survives, I will consider it.  The Container Store is the most likely next addition.  Thoughts?

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#8) On January 02, 2014 at 4:32 PM, Mary953 (73.11) wrote:

Jake,  How have you been and why aren't you posting, young man?  I miss hearing from so many of my friends, or do I have to open a Twitter account to hear from you as well.  Say it ain't so.  There are so many new people that could benefit from your wisdom. Lord knows, I have questions but certainly no answers.

Dragon, I am also doing the "Now you can post - Now you can't"  two-step.  Aggravatin', ain't it?  At least I have gotten down to a few hours between switch-offs.  :P

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#9) On January 02, 2014 at 4:58 PM, dragonLZ (99.45) wrote:

Thanks Mary and Happy New Year. 

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#10) On January 02, 2014 at 7:15 PM, anchak (99.84) wrote:

Hey Jakila: I was thinking about it along the same lines - except I cant make out the logic of this statement:

 "The problem in 2014:  the S&P was up almost 30% in 2013.  There aren't a whole lot of "losers" to sell. Instead, people are probably doing tax-selling in January to delay the taxes on their gains for another year.  Hence, it's the reverse affect. "

The whole idea of a tax selling to the year-end and the corresponding buy in bounce - disappeared - due to the stellar year..... that I get 

 

But what is tax-selling in Jan? If I didnt have any losses on 12/31 - what losses am I selling on 1/2 ?

 

Best

 

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#11) On January 02, 2014 at 7:36 PM, jiltin (26.61) wrote:

Valyooo,

It happens last 3 to 7 days at least.  

Every investment firms, small, medium and big rebalance their portfolios (sell) to provide low tax to IRS, keeping their good stocks as long term. 

Some of them will also buy for profit like what you do.

Overall, selling pressure is higher than buying at the year end.

Now, you know that no one can kill it except IRS. If the change the tax year, things will change.

I have noticed this trend from 2000 onwards even though I have not invested money until 2013. 

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#12) On January 02, 2014 at 8:14 PM, Valyooo (99.47) wrote:

Jakila, I know that the January effect is caused by tax selling, and I've read about IG in many books. but that's amulti week phenomenon. I'm specifically taking about buying qqq at 3:59:59 and selling at 9:30:01

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#13) On January 02, 2014 at 8:15 PM, Valyooo (99.47) wrote:

Anchak,

 

 The reverse would be that investors wanted to sell some stocks they had big gains on, but didn't want to pay capital gains tax yet, so they sell today 

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#14) On January 03, 2014 at 6:39 AM, JakilaTheHun (99.94) wrote:

But what is tax-selling in Jan? If I didnt have any losses on 12/31 - what losses am I selling on 1/2 ?

As Valyooo pointed out, investors that have large capital gains might have been delaying their selling activity from late 2013 to Jan 2014 for tax reasons.  

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#15) On January 03, 2014 at 11:19 AM, Mary953 (73.11) wrote:

I cannot help but laugh at myself a bit.  I got the answer to the changed behavior because it was intuitive.  I just didn't know that the behavior and its change had a logical economics style answer.  In like manner, after I lost my mom and got her financials after probate, I realized that her broker had been churning her account.  I transferred everything to my broker immediately.  I created a taxable event - on March 5, 2009.  I am still working off of the tax loss that I created.  Some things just feel wrong to me.  Apparently musicians and investors pick up on the same rhythms.  But how can I ever explain that logically.  "It felt right?"  I don't think that would go over too well with people who actually do understand what they are doing.

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#16) On January 04, 2014 at 2:08 AM, Valyooo (99.47) wrote:

Mary I picture you as the nicest woman of all time and very pretty. Hope all Is well

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