Are you changing your strategy between December and January?

[NW-Bound]

During 2022, I already lowered my stock AA from 80% down to 60%. I plan to keep it at 60%, and eventually return it to 80% when I feel it's right.

I hold mostly individual stocks to avoid frothy high-P/E growth stocks, and will continue to do so. I still need to add more defensive stocks to the mix.

So, no change in strategy.

[big-papa]

Nope, US/International ratio stays at 80/20 with bond portion composed of duration matched TIPS + our usual January $10K each Ibonds + $5K Ibonds via Tax refund. As always.

Retiring in April, so only question will be whether I have any space for our first Roth conversion before year's end. If there is, it won't be huge. But will start conversions in earnest in 2024.

Cheers,
Big-Papa

[dunkelblau]

I trade mostly microcaps (<100M USD) and the only seasonal shift I play is the "January effect". The premise is that tax-loss selling and window dressing buying at the end of the calendar year amplify share price divergence between recent good vs bad performers in 4Q. Then early in 1Q mean reversion gives last years bad performers a temporary relative bump in share price. So my play is to bias purchases towards year end and look for names that had a bad year, which means my AA equity share jumps higher in December.

In most years I believe this January effect is not strong, but 2022-2023 might be an exception. My normal rate has been to buy maybe two or three per week, but for December 2022 I counted 169 distinct names purchased. Small biotechs crashed badly in 2022, so it wasn't hard to find candidates with symbols ending in RX/DX/TX whose market cap dropped to less than half of net cash-minus-debt reported at 2022Q3 (this seems like a good margin of safety, but it often isn't because most biotechs burn cash at eye-watering rates). I noticed some of my new buys appeared in the top-10 daily gainers during this first week of 2023, so I took the time to check 5-day returns on all 169 of these.

The distribution of these 5-day returns caught me by surprise-- in normal times I'd expect a cluster spanning -10% to +10% (aka noise) with several >10% and about the same number <-10%. For this set of 169x during the 5-days ending yesterday, I see that the +10 to +30% bin actually outnumbers the -10 to +10%, with 45x >30%, and only 6x <-10%. Median 5-day share price change across all 169 names is +16.5%, and their equally-weighted average is +23.6%.

I believe the usual holding window for January effect plays is a few weeks, but given the extreme severity of the downturn in 2022 on most of these names, I wonder if the bounce may last longer in 2023? Time will tell.

[Koolau]

Quote:

Originally Posted by Car-Guy I said no earlier in the thread because the OP asked about changing strategies between Dec/Jan. But in reality I started to change mine in mid 2022... By YE I completed my move to 100% fixed income and don't plan on changing "this year". For me, that means no more equities (long or short term). If fixed income rates continue as they have over the past 6 months, I should pull down ~double what my annual spend is this year. And I don't live below my means. I can live and sleep with that!

If you don't mind sharing, what do you consider fixed income investments? I consider that I'm about 2/3 in non-equities though they may not all be "fixed" income. I'm using I-bonds, a GIF (guaranteed income fund) in my 401(k), old SPDAs (single premium deferred annuities - similar to MYGAs) and MYGAs and a Vanguard short term bond fund as well as bonds in pssst Wellesley. Right now I have NO CDs but I'm looking. Thanks.