It’s not what you think. I apologize in advance for the headline appearing to look like a clickbait but, it’s the first thing that came into my mind when I thought of writing about the Santa Claus Rally.
If we remember what happened last December, it was bad. Dow underperformed and the trade war dragged the stock market down. For those who do not believe in Santa, well, he made it rain since X’mas (or was it the Plunge Protection Team?) and most of us ended up having a terrific 2019 investing in the stock market.
So why wait? Here is an interesting chart to digest. Since 1896, the Dow has risen 76% of the time from Christmas through the first two trading days of January. That is known as the Santa Claus rally.
However, that is not the only reason to wait till X’mas. Statistically, the Dow will perform better if Santa did not come to visit. Hence, it makes sense to wait and see what happens after X’mas…. Just kidding! As fascinated as I am at the statistics, I’m not really waiting for the last 5 trading days to position myself in the market for 2020.
These are just some of the more interesting statistics that I saw when I was researching on the Stock Traders’ Almanac. Please do not bet on a declining market if a Santa Claus rally materialize, I highly doubt that a week’s performance has any special forecasting significance.
As the 2019 comes to an end, I will prolly be doing a portfolio review and look at my trading/investing journal next week and I think I’ll have a good laugh at some of the investing mistakes I made this year. You guys should do it too. It’s good to learn from your mistakes, or if you had a great year, congrats and aim to repeat it next year.
Happy holidays, cheers.