How to Prepare for the Stock Market ‘Santa Rally’

In today’s Money Morning…learning the ropes…the magnetic advantage…the car of the future could leave Australia behind…and more…

It’s that time of year again…

The time where Santa Clause begins to make his merry presence known. And it’s not just children who get excited at this thought.

Every December, avid investors prepare themselves for the possibility of the ‘Santa Rally’. A phenomenon that sees most major stock markets rise in late December and early January.

Why, you might ask?

Well, there are a few reasons.

In the US it is often attributed to tax reasons, with the end of year presenting a variety of considerations. Leading to increased spending and offsets that help boost the economy.

Or, some speculate that the real reason may be institutional investors. With many of the large funds and sophisticated investors going on holiday during this period. Leaving the market mostly dominated by a far more optimistic retail cohort.

Personally though, I think the Santa Rally just comes down to emotion. With the Christmas period revolving around feelings of generosity, jubilation, and optimism.

Because as much it can be a stressful time, it is generally a happy one.

And for the stock market, happy translates to gains!

How to Limit Your Risks While Trading Volatile Stocks. Learn more.

Learning the ropes

Now, for most shareholders this Santa Rally is just a nice little boost. A relative blip for any long-term investor.

It doesn’t really offer much more than that though, short of cashing out entirely. But, that isn’t something anyone should do without careful consideration.

However, for the more adventurous investors, trading during this time can be incredibly lucrative. With hard and fast gains to be made, if you know what to look for and where.

We’re already seeing certain sectors hitting their stride. Breaking away from the broader indices.

So, if you’re up for the challenge you can try your luck.

Just don’t go in blindly. Because you can just as easily get burned as you could make a small fortune. It all depends on your experience, skillset, and methodology. Not to mention a healthy dose of luck for good measure.

Fortunately, though, most of this can be learned.

Even if you’re a complete novice, I’d recommend trying paper trading to see how you go. Mimicking the trades you’d like to make, just without actually committing any money.

Plus, you don’t even need to rely on actual paper to paper trade anymore. There are a bunch of apps and games that can be found online. Just google ‘paper trading app’.

But like I discussed yesterday, when it comes time to actually trading your hard-earned cash — you need a strategy. And the Santa Rally is no different.

Because while markets may be jubilant overall, there will still be winners and losers…

The magnetic advantage

In my honest opinion, if you’re looking to trade the Santa Rally — or trade at all, for that matter — then you need to listen to what Murray Dawes is saying.

He is our resident trading expert here at Money Morning. And he’s just wrapped up a four-day workshop. Explaining how his ‘Magnetic Trading’ strategy works.

You can read all about it right here:

Because if you have even a slight interest in trading, this content is perfect for you.

Murray takes a step-by-step walkthrough on his unique strategy. Explaining exactly how and why he executes his trades. Not to mention a few examples of his remarkable past performance.

So, as Christmas draws ever closer, do yourself a favour and learn how to approach the Santa Rally. Whether it be simply learning the ropes via paper trading or taking the plunge for real.

It only comes around once per year, so it’s best to make the most of it. And with Murray’s help, you could be off to a flying a start.


Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

To find out more about the publications Ryan works on and how you can subscribe, please click on the corresponding link here:

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