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Investing in Seasonal Stocks

Written By Brian Hicks

Posted November 4, 2008

Wouldn’t it be nice to forget about the recent financial shock, for a change… and rest comfortably knowing you can earn worry-free profits from fairly run companies?

Here’s one way to do it…

How to "Invest Seasonally"

Every year it’s the same old thing. Americans (about 90% of them, according to Johns Hopkins Medicine) make their New Year’s resolution to lose weight, diet, and exercise more, which usually ends in passing on the resolution until next year.

It’s a seasonal phenomenon that many of us are all too familiar with.

And this year won’t be much different, as we head into the season between our ritualistic Thanksgiving "stuffing," holiday parties, and the December holidays.

It’s when we start feeling "fat" and worry about our added "baggage" that we promise ourselves that next year will be different… but never is.

But we’re not here to judge. We’re here to make money.

Profit from the Diet Craze

Simply find the stocks, namely ones like (DIET), that have historically risen at the tail end of the year on New Year’s resolutions… and buy at the beginning of November and sell in December.

While we haven’t noticed similar runs in stocks like Weight Watchers and Nutrisystem, we have seen it in (DIET).

  • From about mid December 2003 to the start of 2004, DIET ran from about $3.50 to about $6.50.
  • DIET ran from $3.25 to $5.35 from mid-December 2004 to the start of 2005.
  • It ran from $4.50 to about $8 between mid December 2005 and January 2006.
  • From mid December 2006 to the start of 2007, DIET sold off after an early November 2006 run.
  • And from November 2007 to December, DIET ran from about $4.50 to $6 before selling off to $2 in the months that followed.

The runs didn’t last beyond those time frames… quite possibly because the resolution was pushed back another year.

Here’s a $74 million online diet company that’s positioned to capitalize on the seasonal, end of year trend of post-holiday weight loss, using innovative diet programs. And it’s not like they’ll have a shortage of customers, as about two-thirds of Americans are overweight.

Just do me one favor if you buy… Never risk the house on this or any recommendation.

Good Investing, and Happy Holidays,

Ian L. Cooper