Word: marketeers
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Dates: during 1990-1999
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That's not a prediction. It's an alert: the table is set for a sharp run-up through January. You can't count on it, and please hold the nasty e-mail if it doesn't happen. But timing the market rarely works anyway, so why not give yourself a chance. If you're tempted to cut and run--don't; and if you have cash earmarked for stocks after the New Year, start investing...
Since 1950, those three months have produced more market gains than the other nine months combined. And we're at it again. Since Oct. 31, the S&P 500 is up 5.2%, the Dow 5.2%, the NASDAQ composite a heady 19%. Yet many investors are sitting on the sidelines, waiting out the Y2K fiasco. (You know, mayhem that would make Moses proud when computers misread 00 as 1900 on Jan. 1.) Yes, stock prices could unravel if Y2Khaos really occurs, or if anything else for that matter ignites a panic. Can you say higher interest rates? But serious jitters seem...
...sure about his melt-up prediction: a 20% Dow gain in the first quarter, Cleland forecasts. But I buy into the case for a strong market big time. Many companies fund their pension obligations in January, giving the market a boost. And there really is a January effect. Stocks that had been sold purely to lock in tax benefits the previous year tend to get noticed and bid higher early in the New Year, often resulting in a rally led by small stocks. There will have been plenty of tax selling by the end of this year. Roughly...
Meanwhile, cash has been piling up in money-market funds--$37 billion in October, the most since the Asian contagion--and flows into stock funds have been tepid. Y2K worrywarts, it seems, are hoarding more than bottled water and canned food. How should you invest? If Cleland is right, pent-up demand will lift everything, and popular tech stocks will get more popular. The traditional approach is through beaten-up small stocks, which may be coming into favor anyway. Salomon Smith Barney likes beaten-up big stocks, including Fluor, H&R Block and Hasbro. You've got choices. The first...
...time.com/personal for more on the January effect and other seasonal market patterns. E-mail Dan at kadlec@time.com