[Summary]
The Halloween effect is a seasonal phenomenon in which stocks are strong from fall to spring.
What is most likely to fail with the Halloween effect is not the lack of knowledge itself, but rather the situation in which a hasty decision is justified later.
In actual investment, the first step is to use it as an aid to consider the timing of investment. However, we cannot overlook the fact that it is easy to deviate from the assumption that it is the same every year.
In this article, we will organize the Halloween effect not as "knowledge" but as a procedure to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First of all, let's divide by Halloween effect.
When looking at the Halloween effect, first determine what you want to judge. The information you need will change depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. The Halloween effect is not the only factor in making a decision. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Scenes where Halloween effects are likely to fail
If we look at the Halloween effect as a pattern of failure, we must first make a narrow premise. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
Checking the following points will make things a lot easier.
| Axis to check | What to see with Halloween effects |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
The Halloween effect doesn't only stumble when you don't have enough knowledge. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Don't decide whether to buy or sell the moment you see the Halloween effect.
- Do not mix the timeline that matches the Halloween effect with your own holding period.
- Don't increase your position to recoup your losses
- Don't make a decision just based on SNS or rankings.
The important thing here is not to rely solely on the Halloween effect as the correct answer. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Before using the Halloween effect as a basis for making an actual judgment, check at least these five things.
- Can you explain in one sentence the purpose of looking at the Halloween effect?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of checking the Halloween effect is not to speed up action, but to reduce unnecessary judgment errors.
Summary
The Halloween effect is a material for organizing investment decisions. Even if you read it as a failure pattern, treating it as a standalone buy/sell signal will lead to poor judgment.
The points to keep in mind are as follows.
- Decide the purpose of seeing the Halloween effect first.
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat the Halloween effect as a tool to pause before buying or selling, rather than as a word to rush into judgment.