Tendency of the stock market to rise between December 31 and the end of the first week in January. The January Effect occurs because many investors choose to sell some of their stock right before the end of the year in order to claim a capital loss for tax purposes. Once the tax calendar rolls over to a new year on January 1st these same investors quickly reinvest their money in the market, causing stock prices to rise. Although the January Effect has been observed numerous times throughout history, it is difficult for investors to profit from it since the market as a whole expects it to happen and therefore adjusts its prices accordingly.
Related information about January Effect:
- January effect - Wikipedia, the free encyclopedia
The January effect is a calendar-related market anomaly in the financial market where financial security prices increase in the month of January. This creates an ...
- January Effect Definition | Investopedia
A general increase in stock prices during the month of January. This rally is generally attributed to an increase in buying, which follows the drop in price that ...
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- January Effect . . . Anyone? - Forbes
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