With the US debt ceiling deadline simmering in the background it is perhaps too early to say if the market will rally further from here but if history was any guide then there is some statistical evidence of January being a positive month for markets. Indeed the infamous ‘January effect’ comes to mind which has long been used to describe stronger asset returns in the first month of the year. Using S&P 500 monthly averages since data started in 1928 the average price return for all January months was +1.73%. January also turns out to be the highest monthly return of all calendar months followed by also decent returns in July (+1.26%). The last 84 January months have produced 59 positive outcomes. January also has the narrowest range for returns with a historical maximum and minimum return of +9.2% and -6.8%, respectively. September and October have historically produced negative monthly returns with the latter also affected by the 20% decline in 2008. Clearly I wouldn’t take are a view here based on some historical statistics but it does tell us something about seasonal patterns in markets. If you are positive about the markets long term you could certainly argue that you should invest sooner rather than later.

Nigel Green deVere Group

blog written on 5th of January