Financial Newsletter
The January effect
Ever since economist Sidney Wachtel first coined the term in 1942, analysts and market pundits have been eager to talk about a seasonal market movement known as “the January effect.”
In its simplest form, the January effect is the rise in stock prices over the first two weeks of each year. The rise is said to be more significant in small-cap stocks, which will eventually fall behind the gains of large-cap stocks over the remainder of the year. Additionally, the price growth supposedly sets the tone for the rest of the year — a strong January effect means a positive year is coming, while a loss in early January means a bad year.
Though there are logical explanations and repeated documentation of the effect, many individuals refute its reliability and question whether it exists at all.
Download article to continue reading:January 2018 Newsletter