’Tis the season to be jolly! According to the experts on CNBC, anyway…
Yes, it’s that time of year when financial pundits on TV ask excitedly:
“Is the stock market set for another Santa Rally as we approach the festive season…?”
It’s as if traders are already pouring a glass of wine, leaving a carrot for Rudolph, hanging up their stockings on the wall…
…and sending their letters to the North Pole, all asking for the same gift – an end-of-year surge for their shares!
I don’t know about you, but when I hear ‘experts’ advising investors to buy a sledge-load of shares for a bumper Santa rally, I don’t hear sleigh bells ringing… I hear alarm bells ringing, and I turn the TV off!
I mean, just because it’s December and a rally might happen, is it really a good idea to buy shares? They’re investments, not stocking fillers!
The only goodwill I’m interested in is on the balance sheet, not of the season!
Here at The Motley Fool, we don’t think anyone should time their investments with help from any of the following:
- predictions from a crystal ball or fortune cookie;
- wiggling lines or formations on a chart;
- tea leaves or tarot-card readings, and;
- completely irrelevant dates on the calendar!
Sure, the first three things on that list are just silly, but some investors really do take investment advice from their calendars! (We don’t think investors should “sell in May”, either.)
I mean, what part of the festive season should make a company any more valuable than it was in November?
Why should the date make me any more enthusiastic about buying a long-term stake in a good business?
Unless I really want to sell my investments, how do share-buyers like me benefit from stocks becoming more expensive at this time of year?
True, we all enjoy watching our shares rise into a profit. But surely it’s not smart for private investors to blindly buy into a rallying market, just because of a seasonal effect?
I mean, if I want to buy shares to hold for a long time, I hardly want to pay an inflated price for them. To paraphrase that Dogs Trust advert, shares are for life, not just for Christmas.
Maybe I’m being a little optimistic there – but at the very least, investments should be bought for the long term, not just December…
“Bah Humbug!”
Yeah, yeah, we all know what’s coming next.
After writing those last few paragraphs, three Christmas spirits will probably haunt me tonight and make me change my un-festive ways forever!
True enough, there is a perfectly valid argument for buying shares this December.
You see, flipping the situation around, there’s no reason not to buy shares at this time of year. Especially if you can find great businesses at the right prices.
In fact, even after everything I’ve just written… I built my largest ever stake in a company right in the thick of the yuletide season last year. (What a hypocrite, right?!)
For those of you lucky enough to have spare cash, or maybe even a Christmas bonus coming your way, it might actually be the perfect time to add to your holdings.
Not to mention, in between all those family gatherings, you might have some time off, giving you some opportunity to sit down and pinpoint a bargain or two in the markets.
