January Holds the Key to Your 2024 Portfolio Strategy
With 2023 behind us, what does a stellar “Santa Claus” rally tell us about what to expect? What about this year being a Presidential election year?
These questions make it an excellent time to review our “investor resolutions.” However, before we commit to our resolutions, let’s check what January may have in store.
There is an abundance of “Wall Street Axioms” surrounding the first month of the New Year as investors anxiously try to predict what is in store for the next twelve months.
You are likely familiar with the “Superbowl Indicator,” “So Goes The First 5 Days. So Goes The Month,” and “So Goes The Month, So Goes The Year.”
Considering that trying to predict the markets more than just a few days in advance is mostly an exercise in “folly,” it is nonetheless a traditional ritual as the old year passes into the new.
While Wall Street consistently espouses overly optimistic projections of year-end returns, reality has often tended to be somewhat different.
However, from an investment management perspective, we can look at some of the statistical evidence for January to gain insight into future performance tendencies. From this analysis, we can gain some respect for the risks that might lie ahead.
According to StockTrader’s Almanac, the direction of January’s trading (gain/loss for the month) has predicted the course of the rest of the year 75% of the time.
From a broad historical perspective, the chart below shows the January performance from 1900.
Furthermore, twelve of the last sixteen presidential election years followed January’s direction.
Speaking of presidential election years, 2023 was held to form with a strong return year, as has been the norm over the last century.
2024, a Presidential election year, also
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