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What Happens To The Stock Market During The Holidays?

During the holiday season, the activities and schedules of Americans tend to change as families and friends take time off to gather together to celebrate. And it isn’t unusual for some traders to also leave work behind to take an extended break from typical routines.

How, though, do traders and investors adjust their schedules in Q4? How do they tweak their investment strategies?

In this post, we’ll offer insights into how stock market activity during the holidays typically compares to the rest of the year, and share information about Christmas stock market trends and historical December stock market trends, overall.

Stock Trading and the Holiday Season

Although the holiday season is typically lower volume, it definitely isn’t no volume. Trading can be more erratic than usual, as well, at least in part because of the different ways that stock traders work (or don’t work) during the season.

Just as with any other profession, not all participants in the stock market handle the holidays in the exact same way. Some see it as a time to relax and recharge, to enjoy the holiday season before the ball drops to celebrate New Year’s Day. Other traders, though, see the yuletide season as one where they can work hard and make some strategic gains in the market, perhaps taking advantage of the period when many other traders take time off.

Black Friday Stock Market Trends

In modern times, numerous experts make predictions about how successful Black Friday shopping will be. In 2018, for example, the National Retail Federation (NRF) estimated that 164 million people planned to shop, either online or in stores, from Thanksgiving to the following Monday (Cyber Monday).

This period is typically considered the biggest retail spending extravaganza of the year in the United States—and investor confidence can hinge on whether or not predictions made were met (or, better yet, exceeded).

If Black Friday week results are good, this may well be reflected in stock prices of publicly-traded retailers . When results are not met, then concerns can arise that consumers are tightening their wallets, which can have an impact in the stock market.

The actual Thanksgiving Day/Black Friday effect on stocks isn’t instantly apparent, since Wall Street is closed on Thanksgiving Day, and is only open until 1pm on Black Friday. But, when stock market activity returns to normal hours after the Thanksgiving weekend, large numbers of investors will look at sales numbers as a way to determine the health of the country’s retail industry and perhaps adjust their buying and selling strategies accordingly.

Can investors always expect Black Friday performances to predict how the stock market will react when it reopens? No. It can’t, and 2018 was a perfect example of how many factors influence the rise and fall of stocks.

Thanksgiving 2018 saw record-breaking digital sales, while Black Friday “pulled in a bumper year for e-commerce.” And yet, stocks did not perform well on Monday, sharply turning down; reports this happened because of crude oil price declines and political turmoil.

Overall, stock investing is for long-term purposes and financial advisors can help you navigate any rollercoaster action.

Investing in Today’s Market

It’s interesting to reflect upon how the stock market typically responds in Q4, but investment is a long-term process, and there’s much more involved than whatever rises and falls in a year’s particular quarter.

For the uninitiated, here are a few key points on how the stock market works. At a high level, a stock is a share of a company, a share that investors can buy or sell. The “stock market” is in fact a term that describes multiple stock exchanges and markets, and they play a significant role in our economy. In just one single day, just one of the stock exchanges (the New York Stock Exchange) conducts about $40-50 billion in transactions every single day.

SoFi also offers investment tips to consider, no matter what month of the year, which include:

The sooner you start to invest, the more time your money has to grow. So, even if you can only start small, say $100 monthly, taking that first step is what gives you the potential to boost your return on investment.

Focus on your commitment on investing, not on specific stocks if the latter isn’t something you’re knowledgeable in. That’s what financial advisors are for. They can help you to invest without stress.

It’s true: portfolio diversification is key.

Keep your long-term goals in mind, whether it’s buying the house of your dreams, sending your children to college or saving for your retirement. These goals, coupled with a reasonable timeline, are a key to success.

Not everyone has the same risk tolerance, so be aware of your own and invest appropriately. In general, a wealth advisor will suggest that a young investor take on more risk, as his or her investments have more time to right themselves from any dips and dives. As you reach your 40s, the advisor may suggest a less risky portfolio. But, it’s up to you and your personal risk tolerance.

Limit what you spend in investment and advisor fees, and in taxes. At the bottom of this post, we’ll share how you can do exactly that with SoFi Invest.

How to Respond When the Market Drops

For the average investor, there’s generally no need to worry about a correction.

Because stock market investing is best when you’re investing for long-term goals, try not to let stock market corrections make you nervous. That’s because these ups and downs can cause people to sell off, which creates the potential for better returns for people who stay in the market.

In fact, a wealth advisor might recommend that you invest extra cash during the price dip. Each person’s situation is unique; so, if you have concerns, it probably makes sense to talk to a trusted advisor, such as those at SoFi Invest.

Working with SoFi Invest

We firmly believe that everyone deserves access to investment management services, so we’re offering you the opportunity to invest with almost no minimum balance. We offer a unique blend of robo-advising and human advisors in a program that allows you to adjust your risk tolerance whenever your financial situation changes or your goals evolve.

Because our professional advisors don’t get paid on commission, they won’t benefit by trying to upsell you to something you don’t need. Instead, they focus on creating a personalized plan for you that dovetails with your financial goals.

We continually track market conditions and adjust your portfolio when the economy evolves.

Ready to get started with investing with SoFi? It’s fast and simple to get personalized advice and start online investing.

Learn More

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory services offered through `SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA /SIPC .

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