The Santa Claus Rally

There is always talk about the Santa Claus Rally in the financial industry this time of year, and with good reason.  Since 1990 the Down Jones industrial average has gained 2% on average in the last month of the year, 81% of the time.   In fact, the last week of the year – between Christmas and New Years – historically seems to be the best week of all; gaining on average 1.7% since 1896.

The reason is unknown, but many believe the yearend rally is due to the January affect; when many investors re-enter the market after selling off stocks late in the year to capture losses for tax purposes.   This re-entry tends to have a positive effect on stock values causing the markets to go up.

The opinions seem to be split whether we will have a Santa Claus Rally in 2011.  There are always a few Grinches and expectedly they are talking about how the ongoing problems in Europe will
interfere with any last minute upswing in the markets.

Either way, if you happen to see Santa over the next few days; make sure to let him know you would prefer a little more green than red in your stocking this year.

I wish you a Wonderful Holiday Season, filled with love, laughter and family,

Merry Christmas!

Tracey