The January Effect 📅

The January Effect

The ‘January Effect’ is one of the most popular stock market anomalies on the calendar, often propelling returns into the New Year. Between 1928 and 2019, the S&P 500 has risen in 63% of January months, and some think that according to the “first five days rule”, possible upside in 2020 might not end there.

Markets have made gains following these first, five trading sessions of this year, and that alone has gotten a bunch of stock market historians bouncing in their chairs. Since the new millennium, sentiment at the starting gun has revealed itself to be a valuable meter reading for year-end returns. “As goes January, so goes the year,” they say! 

Give a big hand to market pathfinder Sidney Wachtel, who discovered the January Effect more than eighty years ago. He reckons that to take maximum advantage, investors should configure their holdings with smaller stocks that have more to prove. The middle of the month is also best, but be warned, there’s no such thing as a free lunch!

Positive odds of 63% still imply negative odds of 37%. Given that investors must double their money to recover from losing half of it, many take those odds seriously and stop short of betting the ranch on unexplained market glitches.

Instead, they exclusively focus on their own fundamental and technical analyses of businesses. This is definitely the smarter move for eleven months of the year, but investors looking for every possible edge won’t let the January train leave without them. It’s final boarding!

Share:

More Posts

What is a kids brokerage account?

23 March, 2023

A kid’s brokerage account is more accurately called a custodial account. This is a brokerage account that parents or legal guardians can open on behalf of their child.

Load More
Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Facebook Twitter Youtube Instagram Snapchat Tiktok
learn
products
plan
Who we are
blog

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community.The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results.Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such.Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.