Who needs the trading month? Just buy the first day
Tradestreaming (blog and book) is all about finding tested investment strategies that perform better/smarter. They can perform better than us trying to outsmart Mr. Market (the majority of individual investors underperform the market) and they perform better than just buying an index fund and letting it fester away in your IRA. I wrote recently about a strategy that entails just owning the market while it's closed and selling when it opens (it rocks, by the way). Continuing upon this meme of finding tested strategies that don't require investors to just blindly buy-and-hold (or as some call it, buy and pray), I read a recent post on first of month trading results by the guys at Stock Trader's Almanac. It turns out the average returns on the first day of each month over the past 13+ years for the Dow Jones (DJIA) are greater than all the other days put together. This is also documented in the newest version of the 2011 Stock Trader's Almanac (affiliate link) on page 62. Check the book out.
According to the research:
Over the last 13.5 years the Dow Jones Industrial Average has gained more points on the first trading days of all months than all other days combined. While the Dow has gained 4417.74 points between September 2, 1997 (7622.42) and February 1, 2011 (12040.16), it is incredible that 6021.31 points were gained on the first trading days of 162 month
- DJIA gains more on one day than all other days combined (Stock Trader's Almanac)
- The 2011 Stock Trader's Almanac (Amazon affiliate link)
- Want to make money in the stock market? Own it when it's closed (Tradestreaming)