Profiting from the Anomalies – Stock Markets are not always right
There are many different factors that affect stock market levels on a minute-to-minute basis. This includes inflation data, gross domestic product (GDP), interest rates, unemployment, supply, demand, political changes, and broader economic forces, among others.
Complicating this are some general market trends, which have been determined historically to exist. Like their share-price-based brothers, these stock market anomalies may provide buying opportunities for investors. These anomalies include:
Price-based regularities:
1. Lower-priced stocks tend to outperform higher-priced stocks, and companies tend to appreciate in value after the announcement of stock split.
2. Smaller companies tend to outperform larger companies, which is a key reason for investing in small cap stocks.
3, Companies tend to reserve their price direction in the short and long-term.
4. Companies that have a depressed stock price tend to suffer from tax-loss selling in December and bounce back in January.
Calendar-based regularities:
These regularities allow you to better...
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