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August is the Dreaded Ghost Month: More on PSEI Seasonality

August is the Dreaded Ghost Month: More on PSEI Seasonality

August is the Dreaded Ghost Month. 

ghost month

source: wikipedia

In Mark T. Market’s Bernstein Seasonality and the PSEi he discussed the Bernstein methodology to figure out the bulls and the bears in a stock market. The methodology makes use of normalized stock prices and graphed to see the trends. In his analysis, the dips are in March, rally until July, dips again in August, flat in October, and then rally in December until February.For all those asking when the Ghost Month is for the Philippine Stock Market, the time when one looking for great bargains buy in dips or invest in mutual funds and UITFs – the answer may be found through understanding PSEi seasonality.

So why is August the AuGhost month?

In Den Somera’s “Dangerous Chinese ghost month” in the Philippine Daily Inquirer August 8, 2011, there is a Chinese belief that for 29 days, the gate of “Lower Realm” or hell opens and lets loose the dead spirits to wander. Hence, this is not the high time for significant events such as weddings, house constructions, business deals, and other major decisions.

Charting the PSEi Index seasonality.

Is there any truth to this in relation to the local stock market?

Maybe some other time I can verify the Berstein effect on the PSEi.
For the meantime, I graphed the PSEi from 2006 to 2012.

Please click the image to view it better.

As you can see from the graph above, the 2012 performance of the stock market index has been on the rise. 2011 seems to have defied the bear months. One interesting observation is the month of September – seems like I can propose a new ghost month. Should I wake you up when September ends?

You can verify statistics here.

What is my plan of action now?

For those who would like to “top up” on their existing equity mutual funds or UITFs, this may be a good time to do so. It’s been an endless search for a pot of gold guessing whether the market has bottomed out or not, hence regardless whether it is bottom or not, topping up on your existing funds (or opening up a new one) may be the right thing to do.

Caveat always – please invest at your own risk.

New to stocks? Other articles you might want to check out:
I’ve written a review of the PinoyInvestor stock market newsletter. Should you wish to read the article, please check out link here.
Here are some articles you might want to read:

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