The first month of any new year tends to be great. Not only does it feel like a fresh start, but it also helps us to draw a line, to make a clear cut, and it reminds us that it’s never too late to start over. This psychological and ever-repeating pattern also shows on the stock market. Throughout history, January has tended to be a great month for stocks.
2020 is not different and off to a great start. The US markets keep moving up because, despite all the disturbing news across the globe, there are plenty of positive news that people don’t talk about.
Good news vs. bad news
Indeed, regular news channels tend to report only the most shocking and catastrophic events. No matter which news channels you follow, chances are that roughly 95% of whatever is being reported on is something that is meant to upset you, to make you sad, angry or disturbed. Something good or positive will usually get a window of 10-20 seconds by the end of the show. Something to “brighten the day”.
But against all odds, the world as we know it is improving on many factors. For this, you just have to dig a little deeper into the news cycle.
General education levels across the globe are increasing, child mortality is shrinking, poverty is at lowest in human history, we can cure millions of diseases and are living longer than ever.
I am following regular news channels to get my daily portion of negativity in, and an alternative channel to balance this out again. There are several to choose from, and one of them is this one: https://www.goodnewsnetwork.org
Why is all this important? Because the stock market is very closely related to human emotions. The sentiment of investors, their emotional connection to the markets, to the companies they invest in, their attitudes, all this has an effect on the stock market.
This is why traditionally, the beginning of a new year is a great time for investors, and why this is the time when one should hold on to his shares as they climb up to new record highs.
So when is a good time to sell? There is no easy and definite answer to that. But there is a quote that gives an indication: “Sell in May and go away…” and of course: “…but remember to come back in September”.