Tuesday, December 3, 2013

Happy December!

Simply put, December is the best month of the year for the stock market. Over the past 30 years, the S&P 500 has gained an average of 1.9 percent in December; simple math tells you that if we saw that kind of performance every month, the market would return more than 20 percent every year. The S&P has been positive in December 80 percent of the time.

The Dow Jones industrial average shows a similar effect. Looking back even further, we can see that over the past 100 years, it has averaged a 1.42 percent gain, and it's been positive in 73 percent of those Decembers.

The best may be yet to come. Some research shows that the real gains for December come in the last five trading days of the year, as well as in the first two trading days of the new year. That late-December uptick has become known as the so-called "Santa Claus Rally."

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