The Capricorn Effect and May Sell-off

Now am beginning to see why stock prices tend to rise in the early part of the year. Apart from the usual fund managers doing their annual spring cleaning, this could also be contributed by the fact that the bulk of dividends for most companies are declared at the end of the FY financial report which usually happens from Jan- Mar. Investors then position themselves for the dividend and in the process push up the share prices. They then hold on to the stocks hoping to reap the dividends. Most of the stocks go ex-dividend in May of each year and when this happens, the share price tend to drop more than the dividend being paid out, especially in a weak market. The share price fluctuations tend to overshoot on either side of the sell-buy equation.
Hence it may be more prudent to buy, if one had to, when the shares go ex-dividend or way ahead of the dividend announcement. At the end of the day the buy and hold approach is still best. Just hold out for the dividend for as long as possible.

(05-05-2012, 12:38 PM)VestedInterest Wrote: Now am beginning to see why stock prices tend to rise in the early part of the year. Apart from the usual fund managers doing their annual spring cleaning, this could also be contributed by the fact that the bulk of dividends for most companies are declared at the end of the FY financial report which usually happens from Jan- Mar. Investors then position themselves for the dividend and in the process push up the share prices. They then hold on to the stocks hoping to reap the dividends. Most of the stocks go ex-dividend in May of each year and when this happens, the share price tend to drop more than the dividend being paid out, especially in a weak market. The share price fluctuations tend to overshoot on either side of the sell-buy equation.

If I were to look at STI month end gain/loss alone, 'Capricon' must have gone on leave from 2008 - 2011 as STI stayed -ve for the 1st 3 months or more!

Quote:Hence it may be more prudent to buy, if one had to, when the shares go ex-dividend or way ahead of the dividend announcement. At the end of the day the buy and hold approach is still best. Just hold out for the dividend for as long as possible.

I actually adopt this approach for my No/Slow Growth category of stocks ie. when market is bullish, just buy-and-hold; when market is bearish/flat, buy way ahead of cd and sell before xd. If you are skilful / lucky enough to find a Growth stock, better to adopt buy-and-buy-more approach!

market is in free fall today, it has been quite some time since i witness STI dropping by so much. Fall, Fall and Fall somemore

Mr. Market caught a cold. Heard there's a flu bug going around......

(07-05-2012, 01:27 PM)shanrui_91 Wrote: market is in free fall today, it has been quite some time since i witness STI dropping by so much. Fall, Fall and Fall somemore

You must have shorted the market!

I counted 29 counters xd today, including index counters such as sph, uob, capitaland. That must be taken into account before you decide today is free fall day.
For your info, there are also many counters xd on 8 and 9 May, so this sinking feeling will go on for another 2 days.
Feeling vertigo already?

(07-05-2012, 02:09 PM)propertyinvestor Wrote:

(07-05-2012, 01:27 PM)shanrui_91 Wrote: market is in free fall today, it has been quite some time since i witness STI dropping by so much. Fall, Fall and Fall somemore

You must have shorted the market!

If the market don't fall, there's no way I am able to long it. Vanguard MSCI Europe ETF looks the most interesting right now in terms of price and yield. I am just waiting for the right time.

(07-05-2012, 05:08 PM)shanrui_91 Wrote:

(07-05-2012, 02:09 PM)propertyinvestor Wrote:

(07-05-2012, 01:27 PM)shanrui_91 Wrote: market is in free fall today, it has been quite some time since i witness STI dropping by so much. Fall, Fall and Fall somemore

You must have shorted the market!

If the market don't fall, there's no way I am able to long it. Vanguard MSCI Europe ETF looks the most interesting right now in terms of price and yield. I am just waiting for the right time.

what is Vanguard MSCI Europe ETF

https://personal.vanguard.com/us/funds/h...st=tab%3A2

It is an ETF by the renowned Vanguard traded on the NYSE. You need to be able to buy ETF on foreign market before you can buy other vanguard etf like total world etf or international bond etf, which I am not allowed to yet.

Try FEZ, listed on NYSE.