Days of the month to avoid buying
The stock market operates based on supply and demand and crowd psychology. When many people buy, the stock value increases because demand exceeds supply. When many people sell, the price drops because supply exceeds demand. Then, if a company is involved in a scandal, its stock drops because investors lose trust and sell off massively. Whichever industry politicians support, companies in that industry will increase in value.
Because of this, to a certain extent, we can predict the price fluctuations of popular stocks that many people buy. For example, about 1-2 weeks before Christmas and New Year, stock prices often drop because people sell a lot to have money for shopping and other things. In addition, everyone is waiting for their year-end bonus, so they are not rushing to buy. If I have capital at this time, I personally often buy.
After Christmas, prices will increase a bit, because many people receive their salaries and bonuses on the 25th and start having capital to invest. Many of my friends set up automatic investing on the 25th; when their salary comes in, a portion is automatically deducted for investment. They also don’t pay attention to what the price is at that time, because they are investing long-term, and a difference of a few dozen yen is insignificant in the future. I actually also support this method to save brainpower, but I set it up to buy on the 4th or 6th so it’s a bit cheaper.
I work in recruitment so I know a lot about employment contracts, salaries, taxes, and insurance. Later on, I’ll chat more with everyone about these things. But generally in Japan, payday is usually the 10th, 25th, 30th, or 31st.
People usually buy stocks right on payday or 1-2 days after that. I avoid buying on these days.
I often open the chart of a stock I like, go to each month, and hover the mouse over the days when the stock price was highest and lowest in the month.
Actually, there is no one-size-fits-all formula for this. Sometimes it still changes because of some news or event. So this is not investment advice. It’s just my personal experience that if I grasp crowd psychology, I can make a decision that is beneficial to my investment strategy.
I usually buy on the 4th, 5th, or 6th.
But I want to emphasize that the most important thing is not when to buy, but to keep buying regularly and consistently every month to be able to accumulate for the future.
See you in the next post!
This content is a sharing of personal experience, not financial or legal advice. Please check current regulations before making decisions.