Buying stocks on Friday often results in losses, as the average return rate is only -0.12%, and the volatility is 15% higher.
Why might buying stocks on Friday lead to losses?
Friday is usually a high period for bad news. For instance, in 2018, the well-known tech company Apple released a quarterly loss report on a Friday, causing its stock price to drop by 7% that day. According to Nasdaq data, from 2000 to 2020, the average return rate on Fridays was -0.12%, while the average return rate on other weekdays was 0.03%. Buying stocks on Friday might lead to a 0.12% loss in your investment, and the daily volatility on Fridays is about 15% higher than on other weekdays.
Trading volume on Fridays is 10%-15% lower than on other weekdays. For example, if a large fund decides to sell a portion of its stocks on a Friday, it can cause a significant drop in stock prices. In December 2019, a well-known hedge fund sold a large number of tech stocks on a Friday, causing the Nasdaq index to drop by 2% that day. For instance, as the week comes to an end and some investors see gains in their stocks, over 60% choose to sell on Fridays.
The weekend effect, such as international political events or natural disasters, causes investors to usually choose to sell stocks on Fridays to reduce their holdings. For example, on the first trading day, Monday, after the 2011 earthquake in Japan, many investors chose to sell stocks on the preceding Friday. Friday is not a good time to buy stocks.
How do experts view buying stocks on Friday?
The market volatility on Fridays is 15% higher than on other weekdays. John Smith pointed out, “The increased market volatility on Fridays adds uncertainty to short-term investments. Investors should act cautiously.” According to statistics from the financial consulting company InvestTech, about 30% of companies choose to release negative financial reports or announcements on Fridays, which can lead to stock price drops. InvestTech’s chief advisor Mary Johnson stated, “Investors should be wary of financial data released on Fridays, as this often signals market turbulence.”
According to data analysis of the S&P 500 index, over the past 20 years, the average return rate on Fridays was -0.1%, while the average return rate on other weekdays was 0.02%. Michael Williams pointed out, “Friday is not an ideal time to buy.”
According to a report by a financial magazine, about 60% of short-term investors tend to clear or reduce their positions on Fridays. Karen Miller stated, “The selling pressure on Fridays is usually higher. Investors should consider this factor and avoid making large purchases on Fridays.”
Economics professor James Brown mentioned, “The weekend effect makes the market more complex and unpredictable on Fridays.”
Can buying stocks on Friday catch a low price?
Apple (AAPL) on October 14, 2022, Apple’s stock price closed at $138.38 on Friday, and the highest price reached $147.27 in the following week. Buying could yield a 6.42% increase, with a return rate of 6.42%.
Microsoft (MSFT) on November 4, 2022, Microsoft’s stock price was $227.04 on Friday, and the highest price reached $242.98 in the following week, bringing a 7.01% increase and the same return rate.
Tesla (TSLA) on December 9, 2022, Tesla’s stock price closed at $179.05 on Friday, and the highest price reached $194.76 in the following week. Buying could yield an 8.75% increase, with a return rate of 8.75%.
Let’s take a look at Amazon (AMZN) on September 30, 2022. The stock price closed at $113.00 on Friday, and the highest price reached $124.66 in the following week. Buying could yield a 10.32% increase, with a return rate of 10.32%.
NVIDIA (NVDA) on January 6, 2023, NVIDIA’s stock price was $149.64 on Friday, and the highest price reached $175.95 in the following week, bringing a 17.54% increase in return rate.
Meta Platforms (META) on February 3, 2023, Meta’s stock price was $192.47 on Friday, and the highest price reached $197.00 in the following week, bringing a 2.36% increase in return rate.
Lastly, Alphabet (GOOGL) on March 10, 2023, Alphabet’s stock price was $90.63 on Friday, and the highest price reached $101.50 in the following week, bringing a 12.01% increase in return rate.
