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The title phrase has been the mantra for many stock traders for years and seems appropriate to look at now since we are almost at that traditional selling time and stock traders do tend to be creatures of habit and very focused on patterns that have worked in the past. Like the “Santa Claus Rally”, the “September Swoon” and the “January Effect”, the trading patterns are usually traced back to the impact of human emotions on stock market investing. Investors have traditionally been optimistic in their outlook for growth and therefore would normally look positively on the potential for the year ahead in late fall and early in the year and would therefore tend to be buyers. As the reality settles in throughout the year that results may not be as good as expected (or promised), then investors turn into sellers. By late fall there is the added impetus of ‘tax loss selling’ which then gives way to buying in the December period. The whole process is simple and logical in many ways.
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