Holiday Stock Market Day-trading

Does this theory work?

[anon123]

I don't know much about the stock market and this is probably a dumb question but I was just thinking, Halloween just happened...

Does it make sense to buy Hershey or Tootsie Roll stock a few days before Halloween, then sell the day after? They're obviously going to sell more candy around this time.

And other holidays for example: Toys R Us stock around Christmas, egg companies around easter?

This seems like a good idea to me, but maybe too obvious.

Appears this theory would've worked, looking at Hershey and Tootsies stock in the 5 day range. They are both up, and would've made money.

Can anyone shed some light?

[phranque]

the markets tend to adjust for the expected business cycles.
it's not like anyone is surprised to see a holiday on the calendar nor that people buy candy for the holiday.
if they happen to announce better-or-worse-than-expected sales results, that may affect the stock price.

chocolate in particular is like a drug that does well despite or sometimes due to a down economy.

[MWpro]

I think you are talking about Seasonal Stock plays. I am a big fan of the "back to school" seasonal stock play.

[jsinger]

Food stocks have been relatively strong all year as people are spending more time at home and less time eating out. Restaurant stocks have done poorly.

Seasonality is certainly factored into prices. Toy stocks had a rough Christmas last year with all the unexpected news about Chinese contamination. That certainly WASN'T factored in beforehand.

Note too that almost all stocks (even mine!) soared last week. The S&P 500 rose from about 860 to 968. This 5 day chart shows that Hershey and Tootsie Roll did about as well as a random group of stocks.
[finance.yahoo.com...]

Click on the one year chart and you'll see that those two candy stocks have done very nicely in 2008. And Campbell Soup has been piping hot all year.

[LifeinAsia]

Most companies announce their sales figures quarterly. So it is doubtful that sales figures for a few weeks in October will be known by any but a few insiders until January. So it is extremely doubtful that price fluctuations during such a short period of time are due to that. And even if they were, it is even more extremely doubtful that no one recognized such a trend before.

Of course, "even more extremely doubtful" does not equal impossible. But like jsinger pointed out, most stocks were up last week from the previous week.

[jsinger]

You aren't asking the key question of whether you or anyone (including Warren Buffett) should rapidly trade stocks. Wall Street wants you to think you can beat the market. The truth is no one can. Most investors including professionals lag far below index funds that simply buy and hold a broad basket of stocks. And that's without taking transaction costs and taxes into account.

Who says so? Warren Buffett and John Bogle (Vanguard's founder).... and many studies showing people buy bad stocks, sell good stocks and are universally terrible when it comes to timing the market.

Your broker will never tell you the truth. His company won't. Your actively-managed fund won't either.

There's a similar story with the way the real estate industry has conned people into thinking "Your Home Is the Best Investment You'll Ever Make."

[buckworks]

They're obviously going to sell more candy around this time

Those increased Halloween sales would be retail sales. The sales action at the wholesale level would have happened earlier than that.

If you're going to try to play with timing, make sure you understand the whole supply chain.

[weeks]

I will encourage you to keep looking around your world and see what is working and not working. Warren Buffett would approve of your thinking. But, of course, you just have to dig into it a little deeper.

You have a sense that, say, candy, is getting to be more and more popular, that some ads you're seeing look very creative and people you know are responding to them. Who is doing that? What is the history of their performance? Is their stock hot or not? Not? Hmmm. Why? How is their debt? Not much of an issue? Hmmm. Look at their management? New guys makes some changes? Hmmm.

Consumer products, however, are tough because they get a lot of attention because--they're consumer products. Service industries (including retailers and restaurants) are fun to watch because they are tough to watch from far away. If a biz has got a service formula that's working in several locations, that's something to look at. And it can only be seen early in the real world.

All of my friends a couple of years ago started raving about McDonald's coffee. I didn't think anything about it, but it turned out they were making some moves in this area and some money. Hmmm.

Keep looking at the real world for opportunities.

[malcolmcroucher]

There are some quality stocks going cheap at the moment . This correction has seemed to oversold a bit so , if you looking to get involved look for stocks with good dividend rates , which are being offered quite cheap at the moment.

[jsinger]

Tootsie Roll and Hershey lagged the S&P 500 today, although both rose a bit in the strong market.

With online tools it would be fairly easy to see how a candy portfolio would have done going back at least 10 years.

[lgn1]

I would recommend that you read up heavily, before getting involved in day trading. Especially with regard to risk management.

I prefer swing trading (holding for days to a few weeks) during these times when fear and greed rule the market and fundementals are thrown out the window.

There are some good dummies books (refering to the book, not the reader), which are good for the novice trader.