Is the January stock market effect real?

hl.co.uk:

We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Newsroom

Newsroom articles are published by leading news agencies. Hargreaves Lansdown is not responsible for an article's content and its accuracy. We may not share the views of the author.

HL Podcast

HL Insight

It’s long been a theory that stock markets rise in the first few weeks of the year, but is it true and what does the data tell us?

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Published on 7 February 2024

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

The January effect is based on the idea that January tends to be a good month for stock markets. It goes back as far as the early 1940s to investment banker Sidney Wachtel. He was the first person to suggest that American stock prices go up more in the opening weeks of the year than in any other month.

Later research looked to confirm this seasonal investment theory and said that this especially affected smaller-cap companies.

A lot of investors have had a great start to 2024 with global stock markets soaring.

US markets hit an all-time high after a strong month for US-listed companies. Netflix had impressive quarterly results and Microsoft became the world’s most valuable company with a market capitalisation of more than $3tn.

As always though, remember, past performance isn’t a guide to the future.

So, is this proof that markets