Investors tend to get rid of their losers near year-end for tax purposes, often hammering these stocks down to bargain levels. Over the years the Stock Trader’s Almanac has shown that NYSE stocks selling at their lows on or around December 15 will usually outperform the market by February 15 in the following year. When there are a huge number of new lows, stocks down the most are selected, even though there are usually good reasons why some stocks have been battered.
Our “Free Lunch” strategy is only a short-term strategy reserved for nimble traders. It has performed better after market corrections and when there are more new lows to choose from. The object is to buy bargain stocks near their 52-week lows and sell any quick, generous gains, as these issues can often be real dogs.
This strategy has been profitable in 18 of the last 20 years with an average basket gain of 13.0%. Like nearly every asset class at the time, the “Free Lunch” trade was down 3.2% in 2007-2008 and again during the mini-bear of 2015-2016. This year’s “Free Lunch” stock basket will be emailed to Almanac Investor Subscribers before the market opens on December 23. Subscribers will receive specific buy limits and stop losses for each stock included and the trades will be tracked in the Almanac Investor Stock Portfolios.
As always, please use protective buy and sell stops when trading futures and options.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.