The “January effect” for stock markets may be fading. When the stock market rolls into the new year it can be kind of unpredictable but the forecast is on the rise. January of 2016 was very rough for U.S. and European equity markets. As stocks begin to rise you may see another decrease in summer where stocks are generally weaker.
Key Takeaways:
- U.S. and U.K. equity indexes holding near record highs, a brighter earnings outlook and rising forecasts for economic growth have all spurred talk of the “January effect,” or the notion that the first month of the year is always bullish for stocks.
- Data suggests otherwise. A Goldman Sachs analysis of returns since 1999 noted that the January effect has faded compared to a longer history going back to 1974.
- Since 1999 the data shows average performance for January has been -0.5 percent against +0.2 percent for all months, relegating the “January effect” to the status of market folklore.
“2016 was a particularly rough January for U.S. and European equity markets which suffered one of their worst starts to a calendar year on record.”
http://www.cnbc.com/2017/01/06/the-january-effect-for-stock-markets-is-fading-goldman.html
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