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Black Friday is the name of the day after the Thanksgiving Day in the United States. This is one of the most important points for the retail market in America and many other countries. This day opens the holiday season, it hosts many sales around the world.
In addition, Black Friday is an important day for the stock market (as well as the next Cyber Monday). Before him, analysts come up with sales forecasts for various companies. In theory, fulfilling or not fulfilling these forecasts can seriously affect the value of stocks, but is it really so?
Note : any investment activity on the exchange is associated with a certain risk, this must be taken into account. In addition, to use the methods described in the article, you will need a brokerage account, you can open it online . You can study trading software and practice performing operations using test access with virtual money .
Why Black Friday / Cyber Monday Affects Stocks
Thanksgiving is an important day for the United States and many businesses in this country. The most obvious profit is received by food companies - this is a family holiday, people gather at home and have feasts for several days. At the same time, on Black Friday, discounts and promotions are offered by companies from many industries. Also on Cyber Monday, retailers are driving online shopping.
However, on Thanksgiving, exchanges in the United States do not work, and on the most important Friday of the year, trading is only half a day. World markets, at the same time, work and react to events in the largest economy on the planet.
According to the portal Investopedia, Black Friday and Cyber Monday are important, because these days many retailers can earn amounts comparable to annual revenues. And since the companies themselves are very serious about this holiday period, investors are also interested in sales figures - for them it is an indicator of the affairs of both a particular company and the whole industry.
Keynesian economists are convinced that economic growth is driven by spending, so declining sales on Black Friday is a sign of slower growth. Also traditionally, activity on the financial market increases before and immediately after the holidays, when exchanges are closed. Many traders build their strategies in such a way as to use this factor.
Some statistics
Last year, in the United States alone, 165 million people made purchases offline and online from Black Friday to Cyber Monday. According to the National Retail Federation of the USA (NRF), on average, the cost of a buyer for a five-day period from Thanksgiving was $ 313.29 - a year earlier this figure was higher ($ 335.47). About 25% of buyers spent money only online, 21% only offline, and the majority (54%) combined these two methods.
Analysts expect in 2019 an approximate repetition of last year's results or a slight increase between 3.8% and 4.2% ($ 727.9 billion - $ 730.7 billion).
Obviously, if everything goes as planned, then stocks of retail companies such as Walmart or Amazon should grow.
Not so simple
Everything looks logical, but Black Friday is just one of the factors influencing the situation on exchanges. Investors analyze various economic and political events. As a result, either the influence of the Black Friday to Cyber Monday period is not too large, or it does not make it possible to build correct long-term forecasts.
For example, last year, the S&P Retail Select Industry index grew by 0.3% in the target period, and then fell by 8.3% by the end of the year. Since the creation of this index in 1999, analysts have found a constant discrepancy between its behavior on Black Friday and the outcome by the end of the year:
An analyst at Marketwatch also noticed a similar behavior for the Dow Jones Industrial Average. In recent years, very often, if it grew on Black Friday or two subsequent trading sessions, then most often by the end of the year there should have been a drop in indicators.
This is due to the fact that many investors are tuned to market growth. Therefore, the slightest positive signals further strengthen their faith in the growth of shares of their chosen companies. Far from always this choice is correct. Therefore, when things start to go wrong, such people, under the influence of emotions, when any negative news appears, try to get rid of the shares, pushing their price down. So in practice, it turns out that in order to create successful market behavior strategies, it is necessary to analyze a larger set of factors than just sales figures for a short, albeit important, period of the year.
It is possible to buy shares of foreign companies from Russia without opening a separate brokerage account with foreign brokers. Such shares are traded on the St. Petersburg Exchange's foreign securities market . Today, more than 500 liquid shares of leading companies in all sectors of the world economy, including all shares of the S&P 500 index, have been admitted to trading.
Useful links on the topic of investment and stock trading:
- Open a brokerage account online
- Test account with virtual money
- Software for trading on the exchange: trading terminal, mobile applications
- Structural Products
- Model Portfolios
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