Investors of Nokia (NOK) have lost 59% of their investment in the period of July 31st, 2002, through January 31st, 2012. There has been at least one trading system, however, that has produced an average of 7.7% yearly profits for a 6 month holding period.
Nokia has traditionally created peak earnings in the fourth quarter due to Christmas sales and lower earnings in the second and the third quarter. I chose the ideal holding period for Nokia's stock based on this seasonality. Nokia's share price is traditionally the lowest after the second quarter earnings announcement in the latter part of July and highest after the fourth quarter earnings announcement in January. Based on this trading pattern I chose the ideal holding period for Nokia's shares as the last day of July through the last day of January for a total holding period of 6 months. Here is a table demonstrating the results of this trading strategy:
|Year||July (last day)||January (last day)||Change%|
There has been only two instances which produced negative returns for this strategy during last 10 years. During July 2008 through January 2009 this strategy resulted in a 55.1% loss and for July 2011 through January 2012 for a 13.1% loss. The average yearly gain has been 7.7% for the 6 month holding period.
It will be interesting to observe if this trading strategy will continue to produce this consistent results compared to the buy and hold strategy. I plan to utilize this strategy for my own portfolio as long as Nokia's earnings show this same seasonality. Based on the history data I recommend buying Nokia now before the end of July and to sell at the end of January 2013. If you are interested in following this trading strategy I recommend that you are prepared do this same yearly trade for at least the next 10 years.
Disclosure: I am long NOK.